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Institutional Investors and Infrastructure Financing

Author

Listed:
  • Raffaele Della Croce

    (OECD)

  • Juan Yermo

    (OECD)

Abstract

The economic downturn is likely to have a lasting impact on the fund management industry and on long term asset allocation strategies of institutional investors. On one hand, in promoting more cautious investment strategies and a greater focus on portfolio risk management in the coming years. On the other hand, the prolonged low-yield environment has heightened the need for return-enhancing strategies, pushing some investors to invest in alternative assets. More fundamentally, the role of institutional investors in long term financing is constrained by the short-termism increasingly pervasive in capital markets as well as structural and policy barriers such as regulatory disincentives, lack of appropriate financing vehicles, limited investment and risk management expertise, transparency, viability issues and a lack of appropriate data and investment benchmarks for illiquid assets such as infrastructure. Les investisseurs institutionnels et le financement des infrastructures La récession économique aura probablement un impact durable sur le secteur de la gestion de fonds et les stratégies d’allocation d’actifs à long terme des investisseurs institutionnels. D’une part, parce qu’elle met en valeur des stratégies d’investissement plus prudentes et conduit à apporter une attention plus grande à la gestion du risque de portefeuille au cours des prochaines années. D’autre part, parce que dans un contexte de faiblesse persistante des rendements, les investisseurs sont incités à adopter des stratégies plus rémunératrices et à investir dans d’autres catégories d’actifs. Plus fondamentalement, le rôle des investisseurs institutionnels dans le financement à long terme pâtit de la prédilection pour le court terme qui se généralise sur les marchés financiers, mais également des obstacles structurels et politiques, comme les réglementations dissuasives, l’absence de formules d’investissement adaptées, des compétences limitées en gestion du risque et des investissements, des questions de transparence et de viabilité des investissements et l’absence de points de référence, en termes de données et d’investissements, en ce qui concerne des actifs aussi peu liquides que les infrastructures.

Suggested Citation

  • Raffaele Della Croce & Juan Yermo, 2013. "Institutional Investors and Infrastructure Financing," OECD Working Papers on Finance, Insurance and Private Pensions 36, OECD Publishing.
  • Handle: RePEc:oec:dafaad:36-en
    DOI: 10.1787/5k3wh99xgc33-en
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    Cited by:

    1. Chuc Anh Tu & Tapan Sarker & Ehsan Rasoulinezhad, 2020. "Factors Influencing the Green Bond Market Expansion: Evidence from a Multi-Dimensional Analysis," JRFM, MDPI, vol. 13(6), pages 1-14, June.
    2. Alberto De Biasio & Alex Murray, 2017. "The social network of the UK PPP secondary equity market – returns and competition in an emerging market," Construction Management and Economics, Taylor & Francis Journals, vol. 35(8-9), pages 468-481, September.
    3. Surbhi Gupta & Anil Kumar Sharma, 2022. "Evolution of infrastructure as an asset class: a systematic literature review and thematic analysis," Journal of Asset Management, Palgrave Macmillan, vol. 23(3), pages 173-200, May.
    4. Xu, Jiajun & Ru, Xinshun & Song, Pengcheng, 2021. "Can a new model of infrastructure financing mitigate credit rationing in poorly governed countries?," Economic Modelling, Elsevier, vol. 95(C), pages 111-120.
    5. Nadine Gatzert & Thomas Kosub, 2017. "The Impact of European Initiatives on the Treatment of Insurers’ Infrastructure Investments Under Solvency II," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 42(4), pages 708-731, October.
    6. Bouteska, Ahmed & Sharif, Taimur & Abedin, Mohammad Zoynul & Ghouli-Oueslati, Jihene, 2023. "Relocating investments by Tunisian insurance and pension funds towards alternative assets opportunities," Journal of Policy Modeling, Elsevier, vol. 45(3), pages 609-629.
    7. Wouter Thierie & Lieven Moor, 2016. "The characteristics of infrastructure as an investment class," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 30(3), pages 277-297, August.
    8. Salvador Bertomeu & Antonio Estache, 2019. "Should Infrastructure Regulators regulate Dividends? Hints from a Literature Survey," Working Papers ECARES 2019-18, ULB -- Universite Libre de Bruxelles.
    9. Pythagoras Petratos, 2015. "Infrastructure and Financial Innovation," Economic Affairs, Wiley Blackwell, vol. 35(3), pages 471-478, October.
    10. Zapata Quimbayo, Carlos Andrés, 2020. "Probabilidad de incumplimiento en inversiones de infraestructura: análisis a partir de modelos estructurales de riesgo de crédito || Probability of default in infrastructure projects: analysis from st," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 30(1), pages 327-345, December.
    11. Bresnihan, Patrick, 2016. "The bio-financialization of Irish Water: New advances in the neoliberalization of vital services," Utilities Policy, Elsevier, vol. 40(C), pages 115-124.
    12. Alharbi, Samar S. & Al Mamun, Md & Boubaker, Sabri & Rizvi, Syed Kumail Abbas, 2023. "Green finance and renewable energy: A worldwide evidence," Energy Economics, Elsevier, vol. 118(C).
    13. Angela TIMUS & Cristina UNGUR & Irina RABOSAPCA, 2017. "Assimilation Of Investment Potential Of Insurance Companies Through Government Securities," ECONOMY AND SOCIOLOGY: Theoretical and Scientifical Journal, Socionet;Complexul Editorial "INCE", issue 1-2, pages 124-132.
    14. Mehmet AKYOL & Yýldýrým Beyazýt ÇÝÇEN, 2017. "The role of institutional factors when determining investment strategies of sovereign wealth funds in stock market," Turkish Economic Review, KSP Journals, vol. 4(3), pages 334-342, September.
    15. Alexandra DARMAZ-GUZUN, 2018. "Analysis of the investments made on the Romanian capital market by the privately managed pension funds – Pillar II," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(3(616), A), pages 49-60, Autumn.

    More about this item

    Keywords

    allocation d'actifs; asset allocation; financement privé; fonds de pension; infrastructure; infrastructure; infrastructure investment; infrastructure policy; institutional investors; investissement en infrastructures; investisseurs institutionnels; pension funds; pension regulation; politique des infrastructures; private finance; réglementation des pensions;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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