Finance and Financial Management Commons^™

Financial Intermediaries In The United States: Development And Impact On Firms And Employment Relations, Eileen Appelbaum, Rosemary Batt, Jae Eun Lee

Rosemary Batt

[Excerpt] Private equity (PE), hedge funds (HFs), sovereign wealth funds (SWFs), and other private pools of capital form part of the growing shadow banking system in the United States, where these new financial intermediaries provide an alternative investment mechanism to the traditional banking system. PE and HFs have their origins in the USA, while the first SWF was created by the Kuwaiti Government in 1953. While they have separate roots and distinct business models, these alternative investment vehicles have increasingly merged into overarching asset management funds which encompass all three alternative investments. These funds have wielded increasing power in financial …