Pension Funds, Insurance Companies and Stock Market Development: Evidence from Emerging Markets

Yilmaz Bayar, Marius Dan Gavriletea, Dan Constantin Danuletiu, Adina Elena Danuletiu and Emre Sakar
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Yilmaz Bayar: Department of Public Finance, Faculty of Economics and Administrative Sciences, Bandirma Onyedi Eylul University, 10200 Bandirma, Türkiye
Marius Dan Gavriletea: Department of Business, Faculty of Business, Babeș-Bolyai University, 400174 Cluj-Napoca, Romania
Dan Constantin Danuletiu: Department of Finance—Accounting, Faculty of Economic Sciences, “1 Decembrie 1918” University of Alba Iulia, 510009 Alba Iulia, Romania
Adina Elena Danuletiu: Department of Finance—Accounting, Faculty of Economic Sciences, “1 Decembrie 1918” University of Alba Iulia, 510009 Alba Iulia, Romania
Emre Sakar: Department of Public Finance, Usak University, 64000 Usak, Türkiye

Mathematics, 2022, vol. 10, issue 13, 1-13

Abstract: Stock markets foster economic growth through meeting the fund requirements of the firms by individual and institutional investors. Pension funds and insurance companies with their long-term investment horizon are critical institutional investors in capital markets. Therefore, this article explores the effect of pension funds and insurance companies on stock market development in 15 emerging market economies over the 2004–2019 period through panel cointegration and causality tests. The causality analysis revealed that stock market development had a significant impact on pension funds and the insurance sector in the short term. However, the cointegration analysis revealed that pension funds had a positive effect on stock market development in Brazil, Chile, Hungary, Mexico, Peru, and South Africa and the insurance sector had a positive impact on stock market development in Chile, Indonesia, Korea Republic, Philippines, and South Africa in the long term.

Keywords: pension funds; insurance companies; stock markets; panel cointegration analysis; panel causality analysis (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2022
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