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The effects of foreign investor composition on Colombia's sovereign debt flows

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  • Gamboa-Estrada, Fredy
  • Sanchez-Jabba, Andres

Abstract

Assessing the composition of sovereign debt holders is important because investors' behavior varies according to distinctive components, including shareholders' preferences, regulatory constraints, and profitability mandates. To study this issue, we examine the determinants of offshore investments of mutual funds and pension funds, which concentrate Colombia's outstanding sovereign debt. Our results indicate that mutual funds exhibit considerable sensitivity to shocks in global factors, such as the Federal Funds Rate, sovereign risk, and the composition of financial indices. This contrasts with findings among pension funds, for which we detected a lower sensitivity to these factors, underlining the differences in foreign investor behavior that can impact sovereign debt flows within emerging markets.

Suggested Citation

  • Gamboa-Estrada, Fredy & Sanchez-Jabba, Andres, 2024. "The effects of foreign investor composition on Colombia's sovereign debt flows," International Economics, Elsevier, vol. 178(C).
    • Handle: RePEc:eee:inteco:v:178:y:2024:i:c:s2110701724000301
    DOI: 10.1016/j.inteco.2024.100507
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    More about this item

    Keywords

    Foreign investors; Sovereign debt flows; Global shocks; Generalized method of moments;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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