Click here for search results
Institutional investors and long-term investment : evidence from Chile
 
Author:Opazo, Luis; Raddatz, Claudio; Schmukler, Sergio L.; Collection Title:Policy Research working paper ; no. WPS 6922Paper is funded by the Knowledge for Change Program (KCP)
Country:Chile; Date Stored:2014/06/16
Document Date:2014/06/01Document Type:Policy Research Working Paper
SubTopics:Non Bank Financial Institutions; Emerging Markets; Debt Markets; Deposit Insurance; Mutual FundsLanguage:English
Major Sector:FinanceRel. Proj ID:1W-Capital Flows And Financial Integration -- -- P053639;
Region:Latin America & CaribbeanReport Number:WPS6922
Sub Sectors:General finance sectorTF No/Name:TF015108-KCP II - Firm Financing from Capital Markets; TF092859-KCP - CAPITAL RAISING ACTIVITY IN DOMESTIC AND INTERNATIONAL MARKETS; TF098583-KCP II - On the use of domestic and international debt markets; BBRSB-BB RESEARCH SUPPORT BUDGET; TF040198-WORLD:; TF094565-KCP II - GLOBALIZATION, RISK, AND CRISES; TF010688-KCP II - Understanding Capital Flows to Developing Countries; TF040145-WORLD:; TF015022-KCP II - Institutional Investors; TF092864-CAUSES AND CONSEQUENCES OF MACROECONOMIC VOLATILITY
Volume No:1 of 1  

Summary: Developing countries are trying to develop long-term financial markets and institutional investors are expected to play a key role. This paper uses unique evidence on the universe of institutional investors from the leading case of Chile to study to what extent mutual funds, pension funds, and insurance companies hold and bid for long-term instruments, and which factors affect their choices. The paper uses monthly asset-level portfolios to show that, despite the expectations, mutual and pension funds invest mostly in short-term assets relative to insurance companies. The significant difference across maturity structures is not driven by the supply side of debt or tactical behavior. Instead, it seems to be explained by manager incentives (related to short-run monitoring and the liability structure) that, combined with risk factors, tilt portfolios toward short-term instruments, even when long-term investing yields higher returns. Thus, the expansion of large institutional investors does not necessarily imply longer-term markets.

Official Documents
Official, scanned versions of documents (may include signatures, etc.)
File TypeDescriptionFile Size (mb)
PDF 65 pagesOfficial version*4.55 (approx.)
TextText version**
How To Order

See documents related to this project
* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.
** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.



Permanent URL for this page: http://go.worldbank.org/ZEZGMFIL70