What explains the size of Sovereign Wealth Funds?
A panel analysis (2008-2018)
Cespic Working Paper 2023/02
Anna Balestra, Raul Caruso, Marco Di Domizio
This paper empirically investigates the economic correlates of the size of Sovereign Wealth Funds (SWFs). We exploit a panel of 28 SWFs for the period 2008-2018. One general finding we assert from this study is that the impact of financial market dynamics on the size of SWFs, while of comparable magnitude to the influence of the domestic economy, exhibits a greater degree of stability. Among other factors, of particular interest is the inverse correlation estimated between the size of SWFs and the existence of armed conflicts. The quantitative reduction in the size of SWFs in the presence of an armed conflict has been estimated to range between 25% and 37%.
