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The Political Aspect of Sovereign Wealth Funds

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  • İlker YAMAN
  • Ahmet Burçin YERELİ

Abstract

Sovereign wealth funds which have become one of the most important financial actors of the 21st century are state-owned investment funds mostly with a long term investment perspective and are in search of commercial return with the aim of protecting and enhancing the accummulation of wealth of the states. Considering the volume they manage, sovereign wealth funds are among the fast-growing investors by leaving behind a large number of financial investors such as hedge funds and private equity funds. The active participation of sovereign wealth funds in the 2007-08 Global Financial Crisis has led to an increase in the interest directed to them and led to a detailed examination of such funds. The global financial crisis has also brought with it the risky view of the sovereign wealth fund activities. The risks carried by sovereign wealth funds draw much more attention than the benefits they provide hence some concerns are arising about such funds. Concerns about sovereign wealth funds can be examined under three group as political concerns, economic concerns and concerns about the transparency of sovereign wealth funds. In addition, because of a number of sovereign wealth funds are chariness about declaring their activities and institutional structure explicitly, regulatory and protectionist measures needed to be taken for such funds. It is also expressed frequently that the investments of sovereign wealth funds will negatively affect the performance of companies and destabilise the financial markets. Considering the experiences at the recent years about sovereign wealth funds, evidences suggest that the minority of the funds are acting for political purposes and the majority of the funds are acting with economic motives. Evidences also indicate that investments made by sovereign wealth funds contribute to the stability of financial markets and global economy. Finally, results show that sovereign wealth funds can affect the performance of the companies positively which they invest in.Classification-JEL: G15, G23, G38, O50, F30.Keywords: Sovereign Wealth Funds, Political Implications, 2007-08 Global Financial Crisis, Regulatory Issues.

Suggested Citation

  • İlker YAMAN & Ahmet Burçin YERELİ, 2019. "The Political Aspect of Sovereign Wealth Funds," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    • Handle: RePEc:sos:sosjrn:190314
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    More about this item

    Keywords

    sovereign wealth funds; political implications; 2007-08 global financial crisis; regulatory issues.;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • F30 - International Economics - - International Finance - - - General

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