The Role of Pension Funds in Capital Market Development

Channarith Meng and Wade Pfau

No 10-17, GRIPS Discussion Papers from National Graduate Institute for Policy Studies

Abstract: This paper provides an investigation of the impacts of pension funds on capital market development, both for stock markets and bond markets. For the overall sample of countries, we find that pension fund financial assets have positive impacts on stock market depth and liquidity as well as private bond market depth. However, when we split the countries into two groups according to their level of financial development, the impacts are only significant for countries with „high‟ financial development. Pension funds do not impact capital market development in the countries with a „low‟ level of financial development. These findings are based on a biased-corrected Least Square Dummy Variables (LSDVC) estimator. The results suggest that countries with 'low' financial development should reconsider the management approach and investment strategies for their pension funds.

JEL-codes: C23 G11 G23 H55 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2010-10
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Citations: View citations in EconPapers (22)

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