Country factors and the investment decision-making process of sovereign wealth funds

J. Amar, B. Candelon, C. Lecourt, Z. Xun*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review


In this paper, we examine the complex decision-making processes that lead to sovereign wealth funds' (SWFs') choice of investment location. Using a two-tiered dynamic Tobit panel model, we find that country-level factors do not have the same impacts on the investment decision and the amount to invest and that SWFs tend to invest more frequently and at higher amounts in countries in which they have already invested. More specifically, we find that SWFs prefer to invest in countries with higher political stability, whereas they are more prone to invest large amounts in countries that are less democratic and more financially open. Our results also lend support to the idea that SWFs are prudent in their choice of a target country with regard to their investment decision but behave as more opportunistic investors with regard to the amounts to be invested.
Original languageEnglish
Pages (from-to)34-48
Number of pages15
JournalEconomic Modelling
Publication statusPublished - Aug 2019


  • Sovereign wealth funds
  • Targeted countries
  • Macroeconomic country factors
  • Two-tiered dynamic Tobit panel model

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