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The impact of the global economic crisis on sovereign wealth funds

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  • Bryan J. Balin

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. Copyright © 2010 The Author. Journal compilation © 2010 Crawford School of Economics and Government, The Australian National University and Blackwell Publishing Asia Pty Ltd..

Suggested Citation

  • Bryan J. Balin, 2010. "The impact of the global economic crisis on sovereign wealth funds," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 24(1), pages 1-8, May.
    • Handle: RePEc:bla:apacel:v:24:y:2010:i:1:p:1-8
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    File URL: http://hdl.handle.net/10.1111/j.1467-8411.2010.01246.x
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    References listed on IDEAS

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    1. Park, Donghyun & Estrada, Gemma, 2009. "Developing Asia's Sovereign Wealth Funds and Outward Foreign Direct Investment," ADB Economics Working Paper Series 169, Asian Development Bank.
    2. Mr. Heiko Hesse & Tao Sun, 2009. "Sovereign Wealth Funds and Financial Stability—An Event Study Analysis," IMF Working Papers 2009/239, International Monetary Fund.
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    Cited by:

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    2. Bataa, Erdenebat & Izzeldin, Marwan & Osborn, Denise R., 2016. "Changes in the global oil market," Energy Economics, Elsevier, vol. 56(C), pages 161-176.
    3. Park, Raphael Jonghyeon & Xu, Simon & In, Francis & Ji, Philip Inyeob, 2019. "The long-term impact of sovereign wealth fund investments," Journal of Financial Markets, Elsevier, vol. 45(C), pages 115-138.
    4. İlker YAMAN & Ahmet Burçin YERELİ, 2019. "The Political Aspect of Sovereign Wealth Funds," Sosyoekonomi Journal, Sosyoekonomi Society, issue 27(41).
    5. Mohamed Ariff & John H. Farrar, 2013. "The governance and regulation of sovereign wealth funds and foreign exchange reserves in a post-GFC world," Chapters, in: John Farrar & David G. Mayes (ed.), Globalisation, the Global Financial Crisis and the State, chapter 12, pages 272-293, Edward Elgar Publishing.
    6. Abdel-Baki Monal A., 2012. "The Impact of Basel III on Emerging Economies," Global Economy Journal, De Gruyter, vol. 12(2), pages 1-33, June.

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