Institutional Investors and Long-Term Investment : Evidence from Chile

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 insur...

Full description

Bibliographic Details
Main Authors:	Opazo, Luis, Raddatz, Claudio, Schmukler, Sergio L.
Format:	Journal Article
Language:	English
Published:	Published by Oxford University Press on behalf of the World Bank 2017
Subjects:	CAPITAL MARKETS DEBT MATURITY INSTITUTIONAL INVESTORS INSURANCE INDUSTRY LONG-TERM FINANCE MATURITY STRUCTURE MUTUAL FUNDS PENSION FUNDS
Online Access:	http://hdl.handle.net/10986/27685

id	okr-10986-27685
recordtype	oai_dc
spelling	okr-10986-276852017-12-14T04:06:51Z Institutional Investors and Long-Term Investment : Evidence from Chile Opazo, Luis Raddatz, Claudio Schmukler, Sergio L. CAPITAL MARKETS DEBT MATURITY INSTITUTIONAL INVESTORS INSURANCE INDUSTRY LONG-TERM FINANCE MATURITY STRUCTURE MUTUAL FUNDS PENSION FUNDS 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. Using monthly asset-level portfolios we 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 has averaged higher returns. Thus, expanding large institutional investors does not necessarily imply more developed long-term markets. 2017-08-09T17:07:49Z 2017-08-09T17:07:49Z 2015-09-29 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/27685 en_US CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research Latin America & Caribbean Chile
institution	Open Data Bank
collection	Open Knowledge Repository
building	World Bank
language	English
topic	CAPITAL MARKETS DEBT MATURITY INSTITUTIONAL INVESTORS INSURANCE INDUSTRY LONG-TERM FINANCE MATURITY STRUCTURE MUTUAL FUNDS PENSION FUNDS
spellingShingle	CAPITAL MARKETS DEBT MATURITY INSTITUTIONAL INVESTORS INSURANCE INDUSTRY LONG-TERM FINANCE MATURITY STRUCTURE MUTUAL FUNDS PENSION FUNDS Opazo, Luis Raddatz, Claudio Schmukler, Sergio L. Institutional Investors and Long-Term Investment : Evidence from Chile
geographic_facet	Latin America & Caribbean Chile
description	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. Using monthly asset-level portfolios we 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 has averaged higher returns. Thus, expanding large institutional investors does not necessarily imply more developed long-term markets.
format	Journal Article
author	Opazo, Luis Raddatz, Claudio Schmukler, Sergio L.
author_facet	Opazo, Luis Raddatz, Claudio Schmukler, Sergio L.
author_sort	Opazo, Luis
title	Institutional Investors and Long-Term Investment : Evidence from Chile
title_short	Institutional Investors and Long-Term Investment : Evidence from Chile
title_full	Institutional Investors and Long-Term Investment : Evidence from Chile
title_fullStr	Institutional Investors and Long-Term Investment : Evidence from Chile
title_full_unstemmed	Institutional Investors and Long-Term Investment : Evidence from Chile
title_sort	institutional investors and long-term investment : evidence from chile
publisher	Published by Oxford University Press on behalf of the World Bank
publishDate	2017
url	http://hdl.handle.net/10986/27685
_version_	1610831051750375424

Institutional Investors and Long-Term Investment : Evidence from Chile

Similar Items