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Emergence of Sovereign Wealth Funds

Lookup NU author(s): Dr Wessel Vermeulen

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Abstract

In this paper we show that domestic economic and political characteristics can explain why some countries established a Sovereign Wealth Funds (SWFs) and others not. We find that 1) the existence of natural resources profits, 2) the government structure and 3) the ability to invest in a socially beneficial way in the domestic economy can explain this choice. At the same time these same factors do not relate to the size of the national savings. We use a sample of countries that established a SWF in the period 1998-2008 and compare them to those that did not set up a fund in the same period. The results suggest that SWFs tend to be established in autocratically run countries that have difficulties finding suitable opportunities for domestic investments.

Publication metadata

Author(s): Carpantier J-F, Vermeulen WN

Publication type: Article

Publication status: Published

Journal: Journal of Commodity Markets

Year: 2018

Volume: 11

Pages: 1-21

Print publication date: 01/09/2018

Online publication date: 02/02/2018

Acceptance date: 22/01/2018

Date deposited: 27/01/2018

ISSN (print): 2405-8513

ISSN (electronic): 2405-8505

Publisher: Elsevier BV

URL: https://doi.org/10.1016/j.jcomm.2018.01.002

DOI: 10.1016/j.jcomm.2018.01.002

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