Sovereign Wealth Funds Forecasting Scale and Their Impact on International Financial Market

Abstract

Abstract:

In recent ten years, sovereign wealth funds (SWFs) develop rapidly, and the scale of SWFs enlarges promptly. At present, SWFs have become one of the important institutional investors in international financial market, and have more and more impact on global financial market. It has aroused attention from the governments of many countries and scholars. By scenario analysis, the paper forecasts the future scale of SWFs, and discusses the impact of SWFs on the global financial market and its stability through revised Barro model, including SWFs risk preference having impact on asset price, equity risk premium and the price-earning ratio of financial market. The results reveal that the boom of SWFs is beneficial to global financial market stability, and the impact of SWFs on the asset price of the global financial market is not obvious. The Chinese government can consider enlarging the asset size of its SWF in order to support the Belt and Road Initiative better.

Key words: sovereign wealth funds, forecasting scale, coefficient of relative risk aversion, asset price

Ma Fang, Chen Weizhong. Sovereign Wealth Funds Forecasting Scale and Their Impact on International Financial Market[J]. , 2016, 28(10): 27-38.

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