IDEAS home Printed from https://ideas.repec.org/a/mes/emfitr/v51y2015i6p1230-1243.html
   My bibliography  Save this article

Herding Behavior and Default in Funded Pension Schemes: The Chilean Case

Author

Listed:
  • Francisco Bravo
  • José Luis Ruiz

Abstract

In 1981, Chile replaced the former pay-as-you-go system with a new system based on individual capitalization, private administration of assets, free choice of fund managers, and state oversight of the normal functioning of the companies. The state imposes a minimum guaranteed return for investments and requires that companies hold assets as reserves to cover that guarantee. This requirement generates a herding behavior among companies. We simulate scenarios for pension fund administrators that deviate from the norm in their investment strategies. We find that the reserve requirement is overfunded under the actual conditions.

Suggested Citation

  • Francisco Bravo & José Luis Ruiz, 2015. "Herding Behavior and Default in Funded Pension Schemes: The Chilean Case," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(6), pages 1230-1243, November.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:6:p:1230-1243
    DOI: 10.1080/1540496X.2015.1080526
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1540496X.2015.1080526
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1540496X.2015.1080526?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bastías, Jaime & Ruiz, José L., 2022. "Equity fire sales and herding behavior in pension funds," Research in International Business and Finance, Elsevier, vol. 62(C).
    2. Brzeszczyński, Janusz & Bohl, Martin T. & Serwa, Dobromił, 2019. "Pension funds, large capital inflows and stock returns in a thin market," Journal of Pension Economics and Finance, Cambridge University Press, vol. 18(3), pages 347-387, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mes:emfitr:v:51:y:2015:i:6:p:1230-1243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MREE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.