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The relationship between pension funds and the stock market: Does the aging population of Europe affect it?

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  • Alda, Mercedes

Abstract

In recent decades, pension fund investment has increased rapidly because of population aging and growing doubts about the viability of western public pension systems. As a result, pension funds have become dominant in stock markets. This paper examines the influence of the pension fund assets invested in equities on stock market development and the market efficiency of 13 European countries, from 1999 to 2014. Our results vary by country, by pension model and among the one-model countries. Nevertheless, revealing a concern about saving for retirement. Finally, our efficiency analysis reveals that the influence of pension funds varies over time and across markets, due to arbitrage opportunities that provoke adaptive managerial strategies.

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  • Alda, Mercedes, 2017. "The relationship between pension funds and the stock market: Does the aging population of Europe affect it?," International Review of Financial Analysis, Elsevier, vol. 49(C), pages 83-97.
    • Handle: RePEc:eee:finana:v:49:y:2017:i:c:p:83-97
    DOI: 10.1016/j.irfa.2016.12.008
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    More about this item

    Keywords

    Capitalization; Development; Efficiency; Pension funds; Stock market;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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