Tao Sun and Heiko Hesse of the IMF have recently released a paper entitled, “Sovereign Wealth Funds and Financial Stability—An Event Study Analysis.”
The paper examines financial stability issues that arise from the increased presence of SWFs. Specifically, the authors assess whether and how stock markets react to the announcements of investments and divestments to firms by SWFs using an event study approach.
Spoiler: They show that there was no significant destabilizing effect of SWFs on equity markets.
Have a nice weekend.
Unsurprising. The concern re SWFs is what might happen if they got a lot bigger. This apart from what one means by stability and how that is measured.