Do Pension Funds Foster Economic Growth better than Mutual Funds?

Leonard Mushunje ()
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Leonard Mushunje: Midlands State University

Africagrowth Agenda, 2020, vol. 17, issue 4, 10-14

Abstract: Tensional arguments about pension funds and mutual funds towards economic development and stimulation seem to be inevitable among policymakers and economic agents with little paid attention as in literature. This study however took a comparative significance analysis of these two independent funds in relation to economic growth in the South African economy. We hypothesize that, mutual funds are more powerful than pension funds in fostering economic growth as evidenced by some scenarios where mutual funds are trusted to encounter pension funds risks. We then used multiple linear regression model accompanied by a t-test means difference test as a measure of significance difference between the two towards economic growth. As a primer approach, we used the Pearson correlation analysis and the results were noted. Pension funds are a powerful tool of fighting poverty in economies. However, our results were not in support. Our results tend to agree with our suspicion. From all the methods used, mutual funds proved to have greater impact on stimulating economic growth (GDP) in South Africa. Therefore, South African policymakers and officials should by all ways try to support the mutual fund industry as it has traceable marks on economic growth stimulation but pension funds should not be totally ignored as they play significant roles as well such as poverty fighting and ensuring survivability of the most stressing dependent group in the economy.

Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:afj:journ2:v:17:y:2020:i:4:p:10-14

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