Role of Social Stock Exchange in Addressing Social Sector Fundraising Challenges: An Information Asymmetry Perspective

Abstract: Many countries, including India, have established social stock exchanges to facilitate fundraising by social sector and thereby support the achievement of national sustainability goals. This study examines the potential of social stock exchanges to address fundraising challenges of social sector players by using the lens of information asymmetry. A qualitative examination was conducted through in-depth interviews with a diverse sample of senior-level representatives and founders of social sector organizations. Themes were derived using a coding procedure. The study findings suggest that social stock exchanges can help reduce the information asymmetry issues between social sector fund seekers and fund providers, thereby addressing some of the fundraising challenges. The exchange could provide an organised platform for raising funds and offer opportunities to resolve issues related to funding culture, misaligned investor-enterprise expectations, fund access, and fund awareness. The study thus, recommends that policy initiatives be taken to make this exchange more robust. Keywords: Social Stock Exchange, Fundraising Challenges, Fundraising Opportunities, Social Sector, Information Asymmetry JEL Classification Number: M14, G29