Setting up a Sovereign Wealth Fund to Reduce Currency Crises

Jean-Baptiste Hasse (), Christelle Lecourt () and Souhila Siagh ()
Additional contact information
Jean-Baptiste Hasse: UCL - Université Catholique de Louvain = Catholic University of Louvain, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique
Christelle Lecourt: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, AMU - Aix Marseille Université
Souhila Siagh: CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, AMU - Aix Marseille Université

Working Papers from HAL

Abstract: This paper assesses whether and how setting up a sovereign wealth fund has a buffer effect against currency crises. Using an innovative dynamic logit panel model framework and a unique dataset covering 34 emerging countries over the period 1989–2019, we empirically show that sovereign wealth funds reduce the occurrence of currency crises. This result is robust to different econometric specifications, alternative definitions of sovereign wealth funds, controlling for currency crisis risk factors, and income level sampling. Our findings have important implications for financial stability and for policymakers, who could further exploit the potential of sovereign wealth funds to better manage foreign exchange risks.

Keywords: Currency crisis; Sovereign wealth funds; Financial stability (search for similar items in EconPapers)
Date: 2024-05-16
Note: View the original document on HAL open archive server: https://hal.science/hal-04588513v1
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hal.science/hal-04588513v1/document (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-04588513

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().