Institutional investors’ allocation to emerging markets: A panel approach to asset demand.

Bruno Bonizzi

Research output: Contribution to journalArticleResearchpeer-review

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Abstract

This study assesses the factors driving insurance companies and pension funds’ portfolio allocation to emerging market assets. By making use of the Emerging Portfolio Fund Research database, it estimates asset demand equations for emerging markets’ equities and bonds for insurance companies and pension funds from advanced countries. These are estimated by using recent advances in the literature on panel autoregressive distributed lag models. Two key results emerge: firstly, consistent with ‘search for yield’ investment behaviour, weaker balance sheet conditions, measured by the lower funding level of pension funds, positively affect the asset allocation to emerging markets. Secondly, the accumulation of reserves by emerging markets is a significant attractor of foreign institutional investment.
Original languageEnglish
Pages (from-to)47-64
JournalJournal of International Financial Markets, Institutions and Money
Volume47
Publication statusPublished - 2017

Keywords

  • Asset demand
  • emerging markets
  • insurance companies
  • pension funds
  • institutional investors
  • panel ARDL
  • search for yield

Cite this

Bonizzi, B. (2017). Institutional investors’ allocation to emerging markets: A panel approach to asset demand. Journal of International Financial Markets, Institutions and Money, 47, 47-64.
Bonizzi, Bruno. / Institutional investors’ allocation to emerging markets: A panel approach to asset demand. In: Journal of International Financial Markets, Institutions and Money. 2017 ; Vol. 47. pp. 47-64.
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Bonizzi, B 2017, 'Institutional investors’ allocation to emerging markets: A panel approach to asset demand.', Journal of International Financial Markets, Institutions and Money, vol. 47, pp. 47-64.

Institutional investors’ allocation to emerging markets: A panel approach to asset demand. / Bonizzi, Bruno.

In: Journal of International Financial Markets, Institutions and Money, Vol. 47, 2017, p. 47-64.

Research output: Contribution to journalArticleResearchpeer-review

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AU - Bonizzi, Bruno

PY - 2017

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AB - This study assesses the factors driving insurance companies and pension funds’ portfolio allocation to emerging market assets. By making use of the Emerging Portfolio Fund Research database, it estimates asset demand equations for emerging markets’ equities and bonds for insurance companies and pension funds from advanced countries. These are estimated by using recent advances in the literature on panel autoregressive distributed lag models. Two key results emerge: firstly, consistent with ‘search for yield’ investment behaviour, weaker balance sheet conditions, measured by the lower funding level of pension funds, positively affect the asset allocation to emerging markets. Secondly, the accumulation of reserves by emerging markets is a significant attractor of foreign institutional investment.

KW - Asset demand

KW - emerging markets

KW - insurance companies

KW - pension funds

KW - institutional investors

KW - panel ARDL

KW - search for yield

M3 - Article

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Bonizzi B. Institutional investors’ allocation to emerging markets: A panel approach to asset demand. Journal of International Financial Markets, Institutions and Money. 2017;47:47-64.