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Sovereign Wealth Funds: Stylized Facts about their Determinants and Governance


  • Joshua Aizenman
  • Reuven Glick


Concerns about the implications of foreign investments by sovereign wealth funds (SWFs) stem in large part from apprehensions about the objectives and governance quality of these institutions. This paper contributes to a better understanding of the stylized facts of SWFs by providing a statistical analysis of a range of characteristics of SWFs, including the motivation for their establishment as well as their size, governance and effect on reserve management behaviour. Specifically, it estimates what factors foster the establishment of SWFs as well as affect their size. It also investigates the extent to which the governance and transparency of individual SWFs correlate with domestic and global governance practices. Lastly, it analyses how asset accumulation by SWFs may affect central bank holdings of official reserves. Copyright 2009 Blackwell Publishing Ltd

Suggested Citation

  • Joshua Aizenman & Reuven Glick, 2009. "Sovereign Wealth Funds: Stylized Facts about their Determinants and Governance," International Finance, Wiley Blackwell, vol. 12(3), pages 351-386, December.
  • Handle: RePEc:bla:intfin:v:12:y:2009:i:3:p:351-386

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    References listed on IDEAS

    1. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    2. Obstfeld, Maurice, 1996. "Models of currency crises with self-fulfilling features," European Economic Review, Elsevier, vol. 40(3-5), pages 1037-1047, April.
    3. Yin-Wong Cheung & Hiro Ito, 2009. "A Cross-Country Empirical Analysis of International Reserves," International Economic Journal, Taylor & Francis Journals, vol. 23(4), pages 447-481.
    4. Edwin M. Truman, 2009. "A Blueprint for Sovereign Wealth Fund Best Practices," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 429-451.
    5. Joshua Aizenman & Jaewoo Lee, 2007. "International Reserves: Precautionary Versus Mercantilist Views, Theory and Evidence," Open Economies Review, Springer, vol. 18(2), pages 191-214, April.
    6. Joshua Aizenman & Reuven Glick, 2008. "Pegged Exchange Rate Regimes-A Trap?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(4), pages 817-835, June.
    7. Joshua Aizenman, 2008. "Large Hoarding Of International Reserves And The Emerging Global Economic Architecture," Manchester School, University of Manchester, vol. 76(5), pages 487-503, September.
    8. Edwin M. Truman, 2007. "Sovereign Wealth Funds: The Need for Greater Transparency and Accountability," Policy Briefs PB07-6, Peterson Institute for International Economics.
    9. Joshua Aizenman & Reuven Glick, 2007. "Sovereign wealth funds: stumbling blocks or stepping stones to financial globalization?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue dec14.
    10. Kotter, Jason & Lel, Ugur, 2011. "Friends or foes? Target selection decisions of sovereign wealth funds and their consequences," Journal of Financial Economics, Elsevier, vol. 101(2), pages 360-381, August.
    11. Benjamin E. Hermalin & Michael S. Weisbach, 2007. "Transparency and Corporate Governance," NBER Working Papers 12875, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Yann Marin, 2009. "Chinese Sovereign Wealth Funds: Past, Present and Future," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 105-114.
    2. repec:sos:sosjrn:170404 is not listed on IDEAS
    3. Joshua Aizenman & Daniel Riera-Crichton, 2015. "Liquidity and Foreign Asset Management Challenges for Latin American Countries," Central Banking, Analysis, and Economic Policies Book Series,in: Rodrigo Caputo & Roberto Chang (ed.), Commodity Prices and Macroeconomic Policy, edition 1, volume 22, chapter 4, pages 091-134 Central Bank of Chile.
    4. repec:eee:iburev:v:27:y:2018:i:1:p:78-92 is not listed on IDEAS
    5. Aizenman, Joshua & Inoue, Kenta, 2013. "Central banks and gold puzzles," Journal of the Japanese and International Economies, Elsevier, vol. 28(C), pages 69-90.
    6. Joshua Aizenman & Reuven Glick, 2010. "Asset Class Diversification and Delegation of Responsibilities between Central Banks and Sovereign Wealth Funds," NBER Working Papers 16392, National Bureau of Economic Research, Inc.
    7. Aizenman, Joshua, 2009. "On the paradox of prudential regulations in the globalized economy; International reserves and the crisis: a reassessment," Santa Cruz Center for International Economics, Working Paper Series qt5hx2x2kj, Center for International Economics, UC Santa Cruz.
    8. Yann Marin, 2009. "Fonds souverains chinois : état des lieux," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 109-119.
    9. Murtinu, Samuele & Scalera, Vittoria G., 2016. "Sovereign Wealth Funds' Internationalization Strategies: The Use of Investment Vehicles," Journal of International Management, Elsevier, vol. 22(3), pages 249-264.
    10. Fabio Bertoni & Stefano Lugo, 2013. "Testing the Strategic Asset Allocation of Stabilization Sovereign Wealth Funds," International Finance, Wiley Blackwell, vol. 16(1), pages 95-119, February.
    11. Mehmet Caner & Thomas Grennes, 2009. "Performance and Transparency of the Norwegian Sovereign Wealth Fund," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 119-125.
    12. Daniel Haberly, 2014. "White Knights from the Gulf: Sovereign Wealth Fund Investment and the Evolution of German Industrial Finance," Economic Geography, Clark University, vol. 90(3), pages 293-320, July.
    13. Hachigian Heather, 2015. "Ambiguity, discretion and ethics in Norway’s sovereign wealth fund," Business and Politics, De Gruyter, vol. 17(4), pages 603-631, December.
    14. I. Anthopoulos & C. Pitelis & C. Liakou, 2016. "The Nature, Performance and Economic Impact of Sovereign Wealth Funds," Working papers wpaper135, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    15. Orihuela, José Carlos, 2013. "How do “Mineral-States” Learn? Path-Dependence, Networks, and Policy Change in the Development of Economic Institutions," World Development, Elsevier, vol. 43(C), pages 138-148.
    16. Naotaka Sugawara, 2014. "From Volatility to Stability in Expenditure; Stabilization Funds in Resource-Rich Countries," IMF Working Papers 14/43, International Monetary Fund.
    17. Joshua Aizenman & Daniel Riera-Crichton, 2015. "Desafíos del Manejo de la Liquidez y de los Activos Internacionales en Latinoamérica," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 18(2), pages 62-96, August.
    18. International Monetary Fund, 2014. "Islamic Republic of Iran; Selected Issues," IMF Staff Country Reports 14/94, International Monetary Fund.
    19. Mehmet Caner & Thomas Grenes, 2009. "Le fonds souverain norvégien," Revue d'Économie Financière, Programme National Persée, vol. 9(1), pages 125-131.
    20. David Kemme, 2012. "Soverign Wealth Fund Issues and the National Fund(s) of Kazakhstan," William Davidson Institute Working Papers Series wp1036, William Davidson Institute at the University of Michigan.

    More about this item

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F15 - International Economics - - Trade - - - Economic Integration
    • F3 - International Economics - - International Finance


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