A critical analysis of the impact measurement in impact finance

Abstract

Academic literature on impact finance has not yet covered all aspects of the topic, nor has significantly contributed, so far, to solve several relevant problems arising from the field. Defining the metrics and measurement models suitable to assess impact is probably, among them, the most important one. Practitioners seem willing to exploit the potential value and, although useful heuristics and practical solutions have been found, no satisfactory and widely accepted valuation model is available. The present paper tries to summarize the state of the art, through the analysis of the available literature and tries to address some possible development in future research. The underlying idea is that the field is still very new, on one side, and extremely diverse in its manifestation, therefore no traditional theory fully applies to it. At the same time, the research on the topic still relays on practitioners’ effort, rather than on academia, a gap that ought to be filled. The paper concludes that Impact Finance and Investing are perhaps too narrow labels that limit the possibility to fully grasp the core of it and propose to widen up it by using “Positive Finance” as a more comprehensive one. Indeed, it has been found that academic empirical studies are so far very few and statistical findings far from being robust. The absence of accepted market models, prevent researchers from delivering a theoretical effective interpretation of the growing market.