chapter  6
20 Pages

Political economy of Small-to-Medium Enterprise (SME) Finance

Lessons from Root Capital
WithMine Aysen Doyran

Using Root Capital as a case study in social impact investing, this chapter examines the prospects and challenges facing the global market for Small-to-Medium Enterprise finance in developing countries. The financial crisis of 2008 contributed to the micro and small and medium enterprise finance gap due to greater difficulties in assessing lending risks. The chapter discusses lessons from microfinance, so as to give a systematic picture of the social enterprise/development literature, which might prove useful for public advocates and researchers. Impact investing revolves around the concept of “social enterprise” that goes beyond meeting the immediate interests of shareholders of for-profit corporations. A variety of actors such as private, for-profit companies, conventional charity organizations, and not-for-profits engage in the development of social enterprise in a multitude of ways – for instance “through social investment schemes or multi-sector partnerships for community development”.