Title

Legitimacy and Market Development Risks of Sovereign Wealth Funds

Department

Economics, Finance, & Quantitative Analysis

Document Type

Article

Publication Date

1-1-2013

Abstract

Sovereign Wealth Funds objectives can be classified as either demand stabilisation, supply side strengthening, or wealth conservation. These objectives cannot only be explained by domestic development needs, they also show different profiles of market development and political legitimacy risks. Specifically, we find that supply side strengtheners are on average exposed to both legitimacy and market development risks. Demand stabilisers carry only market development risks. Wealth conservation funds have the least exposure to either risk.