Investment funds have grown significantly in Finland – do their operations involve stability risks?
Leino, Topias (07.06.2016)
Volyymi
90Numero
2/2016Julkaisija
Bank of Finland
2016
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-201606131193Tiivistelmä
Investment funds have emerged as significant financial intermediaries in Finland since the turn of the millennium. In this role, they supplement traditional deposit banking. However, from the perspective of financial stability, investment funds may also involve risks reminiscent of banking. One such key risk is if assets invested in funds are converted into significantly less liquid (less cash-convertible) form. Why can such liquidity transformation in a worst-case scenario pose a risk to financial stability, and how extensively is it performed among Finnish investment funds?