Importance of institutional investor
2798 mots
12 pages
Introduction Institutional Investors became more and more important over the years. This is reported by the Institutional Monetary Fund (2005); in their report, IMF shows that Institutional Investors managed more than $45 Trillion in financial assets (including more than $20 Trillion in equities). However, this is not the solely evidence of the exponential growth of Institutional Investments since the past few years. Thereby, according to the Office of National Statistics (2000), the size of institutional investments has massively increased between 1970 and 1998 (Appendix I). For instance, in the UK, the value of Institutional Investments has increased from 42% in 1970 to 199% in 1998. Moreover, the development of Institutional Investments is not sticked in developed markets but also reached emerging countries Khorana, Servaes, and Tufano (2005). Those arguments and figures being exposed, it becomes evident that Institutional Investments became incontrovertible players on the financial markets. This raises the question of their importance for such markets. Nevertheless, before tackling the question of the importance of Institutional Investors on financial markets, the main terms have to be defined: _First, an Institutional Investor is _an organization such as investment companies, mutual funds, pension funds, investment banks_ etc. that trades securities in large enough share quantities that they qualify for preferential treatment and lower commissions (Investopedia 2010)_. Then, financial markets are markets_ for _sale_ and _purchase_ of _shares, bonds, bills_ of exchange, _commodities, derivatives, foreign currency, etc., which work_ as _exchanges_ for _capital_ and _credit_ (BusinessDictionary 2010)_. The main terms being defined and being understood, the importance of Institutional Investors can now be assessed. This paper is divided into three main parts: The first part is dedicated to the issue of price volatility relating to Institutional