State financial interests and changes in investment behavior of institutional investors

The case of financial market development in Israel

Bibliographic Data

ID4237644
AuthorsDaniel Maman (0000-0002-7656-8722, Ben-Gurion University of the Negev, corresponding author)
Year2022
Volume20
Issue4
Pages2073-2093
Publication date2022-11-22
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueSocio-Economic Review (JOURNAL)
Journal identifiersISSN: 1475-1461 • E-ISSN: 1475-147X
PublisherOxford University Press (PUBLISHER • GB)
DOI10.1093/ser/mwab024
OpenAlexW3167485606
LanguageEN
Citations received1
References cited50

Institutional investors are key actors in the financial markets of diverse developed economies. Their tendency toward diversification and risk-taking behavior is well documented, yet insufficient attention has been paid to the sources of this behavior. Based on the case of emerging financial markets in Israel, this paper argues that in adopting various neoliberal reforms, state agencies induced institutional investors to change their investment behavior toward diversification and greater risk-taking. Until the early 2000s, Israel's institutional investors were marginal actors in a financial system designed to support state-building, primarily investing in government bonds and bank deposits. As changing state financial interests induced market changes, institutional investors emerged as autonomous actors, diversifying their investments to also include corporate bonds, stocks and investments in foreign financial markets. With individuals' growing dependency on institutional investors for their financial security, greater insight into the role of state agencies in financial markets could help identify factors affecting their functioning in financial capitalism

Bond · Business · Corporate governance · Diversification (marketing strategy) · Economics · Financial market · Financial market participants · Financial system · Indirect finance · Institutional investor · Market economy · Banking stability, regulation, efficiency · Finance · Housing, Finance, and Neoliberalism · State Capitalism and Financial Governance

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