The author of the article is analyzing the economic justifications for Social Stock Exchanges (SSEs) in India, particularly in light of recent regulatory amendments proposed by the SEBI. The article explores the role of SSEs in facilitating social enterprises, such as non-profit organizations (NPOs), in raising funds by offering a platform for social impact investment. The author uses an economic and legal framework to investigate the efficiency and effectiveness of SSEs in addressing agency problems, transaction costs, and information asymmetry between investors and social enterprises. The author delves into SEBI’s proposed amendments, such as mandatory disclosures and expanded registration criteria for NPOs, which aim to increase market transparency and attract more investors. However, the article also discusses the potential drawbacks of these amendments, particularly the increased operational costs for NPOs due to stringent disclosure requirements, which could reduce the net benefits of SSE participation. The article highlights the need for a delicate balance between ensuring transparency and minimizing transaction costs to maintain market efficiency and the long-term success of SSEs.
Continue reading Economic Justifications of SSEs: SEBI’s Regulatory Amendments and Their Impact on NPOs