Dr. Artur Grigoryan

An economic analysis of "Sovereign Wealth Funds" in the global financial system

Sovereign wealth funds (SWFs) are not a new phenomenon in the global financial system, even if this term was defined recently. Although the first well-known SWFs were established in early 1950s (Kuwait, Kiribati) and during the 1970s (Abu Dhabi, Singapore), the international debate about the role of the latter was activated only a little while ago. The rise of SWFs in the front of important global structural changes has stimulated concerns about ambitions and investing strategies of SWFs and encouraged the international discussion about the importance and functions of state-owned investors. The global imbalances, the running current account surpluses of emerging countries and the US twin deficits as well as the financial turmoil of recent years have been supporting varying beliefs and understandings of SWFs.

 

The change in perception of SWFs and the adjustment of the public opinion about this phenomenon is remarkable. While not so long ago the SWFs were seen as one of the vicious instruments of state-owned capitalism, in times of the financial crisis and global depression they became "white knights" for cash-strapped companies and attractive buyers of last resort. Presently, the SWFs are interpreted as symbols of a shift in global power, and this raises again questions about the possible abuse of markets and fears that SWFs will be used for political and strategic goals.

The economic analysis of SWFs is complex. The following main issues must be considered: 

The main objective of the PhD project is to analyze the investment decisions of SWFs and their behavior in international financial markets in an appropriate theoretical framework based on empirical studies of their characteristics.