CHALLENGES AND OPPORTUNITIES OF THE NEW GLOBAL FINANCIAL PLAYERS

Purpose – Since the advent of the recent global financial crisis, Sovereign Wealth Funds (SWFs) have emerged as important global financial players. Although the contribution of these funds has been widely recognized, speculation about the motives and objectives of these larges funds has remained a source of controversy. While global conditions continue to hinder the availability of capital resources, SWFs continue to increase their role as global sophisticated investors, altering the conventional flow of capital in the global financial market and thus challenging the market model. The purpose of this paper is to evaluate the implications of SWFs in the global economy as well as the opportunities and challenges of these larges funds. Design/methodology/approach – This is a research paper based on secondary data analysis. Data is obtained from various official entities. The evaluation incorporates aspects related to investment motivators and the strategic vision of these funds. It also includes an appraisal of the international institutional initiatives in response to the controversy surrounding these funds. Findings – The emergence of SWFs has transformed the traditional flow of capital in the global financial market; there is a significant shift from the dominance of the Western world to the surging importance of the emerging and developing economies. This transformation has also involved public capital financing private investment. Originality/value – Since the phenomenon of the role of SWFs in the global financial system is novel, scholarly research on the topic of SWFs is limited. As the opportunities and challenges associated with SWFs have yet to be finely discerned, this paper addresses some of the current gaps in scholarly research in this area.