Proceedings of Paris Economics, Finance and Business Conference
13 - 15 April 2015, Crowne Plaza Hotel Republique, Paris, France, ISBN: 978-1-922069-73-3
Sovereign Wealth Funds (SWF) have become major players in global financial markets. About 70 SWFs across the world hold nearly $6 trillion in assets, more than twice as much as all hedge and private equity funds taken together.
During the 2008 financial crisis, some of the governments in resource-rich countries, which have a SWF, used those funds to support domestic companies in financial difficulties and which were of strategic importance.
Thus – a question stands - whether the recent financial crisis, provides evidence, to support the proposition that SWF are effective tools to stabilize the financial sector/ economy.
The aim of this paper is to choose up to six SWFs that were used in the recent financial crisis to stabilize the financial industry. I will select the SWFs from countries with various level of development (two from low income, two from middle income and two from high income) and different institutional setups. In the paper I will provide a short overview of the history of selected SWFs and asking standardized questions such as:
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Why it was set up in the first place?
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Was it made to be a stabilization fund or was changed to one when the country was in financial trouble?
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How independent/ transparent the SWF is?
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How big it is?
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Was it used to support the financial industry as a shareholder or lender of last resort (or in another way?).
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What exactly did the SWF do during the financial crisis?
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Did the government implement other supportive policies for the financial industry during the crisis?
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What happened to the SWF after the crisis?
Case studies of countries such as Russia, Chile, Kuwait or Australia showed that resource-rich countries, which stored money for a 'rainy day' in SWFs, were equipped with an additional tool to stabilize their economies. This stays true to all countries regardless of their level of income. The governments used the SWFs to intervene in two ways: as a 'shareholders of last resort' (SWFs took stakes in firms that had financial troubles, for instance through recapitalizing banks) or as a 'lender of last resort' (SWFs provided loans or guarantees to troubled companies).
The former type of SWF intervention was implemented in countries such as Kuwait, China or Russia, while the latter was used in Chile, Australia – and also - in Russia. However, depending on the level of income of the country and the level of institutions, different countries use SWFs in a different way (more transparent in developed countries).
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Kamil Pruchnik, Research Affiliate at Tufts University & Jr Economist at the National Bank of Poland &
Ph.D. candidate at the Warsaw School of Economics, Street Pol na 15 B Mysiadło 05-500, Poland,
Email: kamilpruchnik@gmail.com

Proceedings of Paris Economics, Finance and Business Conference
13 - 15 April 2015, Crowne Plaza Hotel Republique, Paris, France, ISBN: 978-1-922069-73-3
Results from this case study comparison might be a very valuable for African countries as there are many new resource discoveries in the region (for instance: oil discovery in Kenya in September 2013 and January 2014, copper & gold in Burkina
Faso in June 2012, iron in Liberia in January 2014 or oil in Uganda 2011) and new
SWFs are being set up in African countries (in 2012 three SWFs were launched in
Angola, Ghana and Nigeria while Tanzania plans to set up its own SWF this year, with Mozambique to follow shortly). Thus, this paper will provide policy makers in the
African countries with additional relevant information on the role that the SWF can play during the crisis.
The prime source of information are i) aggregated databases of SWF transactions
(mainly Sovereign Wealth Fund Institute and SovereignNet), ii) SWF websites and iii) various financial news and reports (such as Factiva). The prime sources of information on the performance of the company are i) company websites and ii)
Bloomberg.
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Proceedings of Paris Economics, Finance and Business Conference
13 - 15 April 2015, Crowne Plaza Hotel Republique, Paris, France, ISBN: 978-1-922069-73-3
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