Islamic finance and social finance, an opportunity for social enterprises

  • Daniel Iannaci University of Turin - Department of Management
  • Jonathan Gideon Mekonnen Stockholm University - Department of Computer and Systems Sciences (DSV)
Keywords: Islamic finance, social finance, social enterprises, social impact, accounting

Abstract

Social enterprises are defined as the real engine of social innovation because they have in their veins the objective of creating social impact and they are the companies with the best structure in the panorama of the third sector. After the recent crisis, social hardship has become more and more frequent in all situations, from health care to housing, for example. Poverty is another existing social phenomenon that has critical effects on the ecosystem. This leads to a decrease in the protection of the quality of life by increasing the need for health services, social assistance, housing and of course social aid on necessities. The engine that could encourage change is the grafting of socially disadvantaged people into the workplace, but the companies themselves need ideas and especially resources to assimilate more staff. It is essential to grow the companies For Impact, but it is not always easy for them to access funding. In order to guarantee a constant increase in social impact, the company's attention must always be combined with performance to ensure survival into the business. Progressively, in these years, there has been a growth of the financial instruments tied to the Islamic finance and these could have an important role not only for the Moslems, but also for the non-Muslim countries.

The constant search for alternative ways of financing is always alive, more so by the companies that make up the third sector, which are open to instruments that respect ethical principles. To support this aspect, there is an evolution of the instruments of social finance and Islamic finance, both of which have the same values.

This document, through an empirical analysis, wants to demonstrate how, through the meeting of the Islamic finance and social finance instruments, it is possible to restart the process of social innovation through the companies which are currently the major players in this field: the social cooperatives.

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Published
2020-03-16