Policy experimentation with impact financing: a systematic review of research on social impact bonds

ABSTRACT

Social impact bonds (SIB) have become a novel and attractive policy tool to assist with service delivery to vulnerable groups. Since the first SIB in 2010 in the United Kingdom, hundreds of projects have been adopted, implemented, and continue to be developed around the world. A broad observation from current research concludes that there is a lack of consistent evidence on research foci and orientations with regard to this innovative policy tool. In the context of the Asia-Pacific region, research on SIBs is largely non-existent. Moreover, research from Asia-Pacific contexts is primarily focused on the (financial) product features of impact financing, at the expense of studying the process innovation aspect of SIBs in service delivery. This contrasts with research from European and North American SIBs, which exhibit a relatively heightened interest on issues in service delivery process and their impact on performance measurement, evidence auditing and evaluation, and accountability to service recipients versus investor returns. As policy experimentation continues with SIBs in the Asia-Pacific region, several key considerations remain vital and require future scholarly attention.

KEYWORDS:

• Social impact bond
• impact financing
• policy experimentation
• product innovation
• process innovation

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplementary material

Supplemental data for this article can be accessed here.

Notes

1. Figure A1 represents the actors in a typical SIB arrangement, while Figure A2 shows the cost impact of SIB utilisation vs. status quo policy without a SIB. These figures are presented in the Appendix A.

2. We do not include six articles focusing on Africa in the discussion. Though their topical structure is most proximate to the Asia-Pacific cluster of studies, the continent is not typically considered a part of the Asia-Pacific region geographically. Further, Europe and North America are primarily driven by studies about/from the United Kingdom and the United States. Topics for this group show that themes are distributed in relatively equal proportions. This is the reason for keeping Europe and Northern America in the same category. The one noticeable difference between the United Kingdom and the United States, however, is that general social policy projects are prominent for the former, while health policy projects lead in the latter.

3. Distributions for dominant topics in abstract corpora, which are extracted using the LDA method, are provided in Tables F1, F2 and F3 in the Appendix F.

Additional information

Funding

This work was supported by the KDI School of Public Policy and Management.

Notes on contributors

Tima T. Moldogaziev

Tima T. Moldogaziev is an associate professor of public policy in the School of Public Policy at the Pennsylvania State University. His primary research interests are in public financial management, capital market and financial innovations, regional and urban infrastructure financing, and subnational fiscal policy.

Cheol Liu

Cheol Liu is an associate professor of budgeting and public financial management at the KDI School of Public Policy & Management. His research interests are in public corruption, taxation, government expenditures, public pension, government debt, e-government, and e-leadership in the public sector. He is the head of the Experiment Lab for Public Management Research, EX(PMR).

Mikhail Ivonchyk

Mikhail Ivonchyk is an assistant professor in the Department of Public Administration & Policy, Rockefeller College of Public Affairs & Policy at SUNY Albany. His teaching and research interests are in the areas of public finance, debt management, fiscal policy, budgeting process and agenda setting.