The Impact of Contractual Savings Institutions on Securities Markets

Abstract

Impavido, Musalem, and Tressel assess empirically the e The impact on stock market depth and liquidity is impact of contractual savings institutions portfolios nonlinear: it is stronger in countries where corporate (pension funds and life insurance companies) on information is more transparent. securities markets, for example, depth and liquidity in o There is evidence of a significant heterogeneity the domestic stock market, and depth in the domestic among countries: contractual savings have a stronger bond market. They discuss how the institutionalization impact on securities markets in countries where the of savings can modify financial markets through the financial system is market based, pension fund lengthening of securities' maturities.contributions are mandatory, and international The results are the following: transactions in securities are lower. * An increase in assets of contractual savings -The authors do not find that the impact of institutions relative to domestic financial assets has a contractual savings institutions on securities markets is positive impact on the depth of stock and bond markets explained by the overall level of development, education, on average. demographic structure or the legal environment.This paper-a product of the Financial Sector Operations and Policy Department-is part of a larger effort in the department to study the effects of contractual savings on financial markets. Copies of the paper are available free from the

Growth of Asian Pension Assets: Implications for Financial and Capital Markets

“…This important result is favorable to the hypothesis that growth of pension funds boosts the scope for bond issuance by firms in the securities market, which may in turn favor investment and economic growth. Our results are complementary to those obtained by Meng and Pfau (2010) and by Impavido et al (2003). It should be noted, however, that we used pension asset data, while Impavido et al (2003) used contractual savings data, which includes pension fund and insurance assets.…”

“…Our results are complementary to those obtained by Meng and Pfau (2010) and by Impavido et al (2003). It should be noted, however, that we used pension asset data, while Impavido et al (2003) used contractual savings data, which includes pension fund and insurance assets. Hence, our results are more relevant to the pension study.…”

“…In a cross-country study, Impavido et al (2003) found a positive relationship between contractual saving assets and bond market capitalization/GDP for 28 countries, whereby a 1% increase in the former leads to a 0.4% rise in the latter. They use the generalized method of moments (GMM) dynamic panel approach in their paper, which is an improvement on earlier studies by other authors.…”

“…Third, when analyzing the impact of pension fund assets on the bond market, we used separate public and private bond data, which is different from Impavido et al (2003) who used aggregate data. Our specification is more appropriate in that it can disentangle the differential impacts of pension asset growth on public bond markets (i.e., not statistically significant) and private bond markets (i.e., positive).…”

The Impact of Pension Funds’ Investments on the Capital Market—The Case of Lusaka Securities Exchange

“…However, these studies have focused mainly on developed countries and emerging markets (Catalan, Impavido & Musalem, 2000 [3]; Impavido, Musalem and Tressel, 2003 [4] and Meng & Pfau, 2010 [2]). Although Limited country case studies have been done on emerging markets (Thom, 2014) [5], little is known about Zambia, hence the need for this study.…”