The Impact of the Global Economic Crisis on Sovereign Wealth Funds

8 Pages Posted: 4 Jun 2010

See all articles by Bryan J. Balin

Bryan J. Balin

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS)

Abstract

This paper analyses the effects of the recent global economic crisis upon sovereign wealth funds (SWFs). Since mid-2007, SWFs have experienced significant portfolio losses, a decline in fund inflows, and enhanced scrutiny from their own governments. SWFs have been utilised for sovereign stabilisation programs and have helped finance troubled Western banks. SWFs and the IMF have also created a set of best practices known as the Santiago Principles. From these developments, many SWFs have moved to relatively shorter investment time horizons and more liquid holdings, revamped their transparency and management, experienced a temporary improvement in their images, begun to hold controlling stakes in major Western corporations, and have improved their coordination with institutional investors and other SWFs. Going forward, these changes, alongside the relatively strong post-crisis asset position held by SWFs in comparison to other asset vehicles, make SWFs well-positioned to play an even more prominent role in global finance.

Suggested Citation

Balin, Bryan J., The Impact of the Global Economic Crisis on Sovereign Wealth Funds. Asian-Pacific Economic Literature, Vol. 24, Issue 1, pp. 1-8, May 2010, Available at SSRN: https://ssrn.com/abstract=1616316 or http://dx.doi.org/10.1111/j.1467-8411.2010.01246.x

Bryan J. Balin (Contact Author)

Johns Hopkins University - Paul H. Nitze School of Advanced International Studies (SAIS) ( email )

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Washington, DC 20036-1984
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