Finance Topic:
Social Finance
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Perhaps the best way to describe social finance is to introduce the economic concept of "market externalities". Market externalities are costs or benefits that aren't usually taken into consideration when making an economic decision.
A classic example of a market externality would be the pollution generated by a business. Much of the time, a business is not required to pay for cleaning up pollution, therefore, pollution is not a factor that goes into a business's decision making.
There is, however, a cost of pollution that society bears that is external to the market that created it. Thus, pollution, in this case, would be a market externality.
The topic of social finance will include subjects that address market externalities or attempt to use finance to address social or societal issues. These subjects might include green economics, environmental finance, Islamic banking, microfinance, social investment, carbon credits, etc.
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