EconPapers    
Economics at your fingertips  
 

Institutional investors and long-term investment: evidence from Chile

Luis Opazo, Claudio Raddatz and Sergio Schmukler

No 6922, Policy Research Working Paper Series from The World Bank

Abstract: 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.

Keywords: Debt Markets; Mutual Funds; Emerging Markets; Deposit Insurance; Non Bank Financial Institutions (search for similar items in EconPapers)
Date: 2014-06-01
New Economics Papers: this item is included in nep-ias and nep-lam
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www-wds.worldbank.org/external/default/WDSC ... ered/PDF/WPS6922.pdf (application/pdf)

Related works:
Journal Article: Institutional Investors and Long-Term Investment: Evidence from Chile (2015) Downloads
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:wbk:wbrwps:6922

Access Statistics for this paper

More papers in Policy Research Working Paper Series from The World Bank 1818 H Street, N.W., Washington, DC 20433. Contact information at EDIRC.
Bibliographic data for series maintained by Roula I. Yazigi (ryazigi@worldbank.org).

 
Page updated 2025-03-22
Handle: RePEc:wbk:wbrwps:6922