Liberalizing foreign investments by pension funds: Positive and normative aspects
AbstractThe paper evaluates the economics of foreign investment regulation for pension funds, with a focus on developing countries, where fully-funded pension systems are being started de novo. The analysis produces three observations. First, the benefits of global portfolio diversification apply particularly to developing-country pension assets because the volatility of asset returns is high while the risk tolerance of pensioners is low. Second, restrictions of foreign investment by domestic pension funds can hardly be justified on grounds of financial-development arguments: cross-country evidence which little support for the claim that the accumulation of pension assets would provide strong externalities for financial development. Moreover, the home bias generally observed in pension fund investment should translate into sufficient potential demand for domestic financial assets so as to deepen markets and develop the institutional infrastructure. Third, a case for initial localisation ... Ce document Ã©value lâÃ©conomie de la rÃ©glementation des investissements Ã lâÃ©tranger des caisses de retraite, notamment pour les pays en dÃ©veloppement (PED) oÃ¹ les systÃ¨mes de retraite par capitalisation sont rÃ©cents. Lâanalyse conduit Ã trois observations. PremiÃ¨rement, elle montre que les produits dâÃ©pargne retraite des PED peuvent tout particuliÃ¨rement bÃ©nÃ©ficier dâune diversification des portefeuilles au niveau mondial ; en effet, les rendements des actifs sont trÃ¨s volatils alors que les retraitÃ©s sont trÃ¨s vulnÃ©rables. DeuxiÃ¨mement, lâargument du dÃ©veloppement financier peut difficilement justifier les limitations Ã lâinvestissement Ã©tranger par les fonds de pension nationaux : cette Ã©tude internationale ne confirme pas vraiment lâidÃ©e selon laquelle lâaccumulation de produits dâÃ©pargne retraite conduirait Ã des retombÃ©es positives importantes pour le dÃ©veloppement financier. De plus, le biais national gÃ©nÃ©ralement observÃ© dans les
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Bibliographic InfoArticle provided by Elsevier in its journal World Development.
Volume (Year): 25 (1997)
Issue (Month): 7 (July)
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Web page: http://www.elsevier.com/locate/worlddev
Other versions of this item:
- Helmut Reisen, 1997. "Liberalising Foreign Investments by Pension Funds: Positive and Normative Aspects," OECD Development Centre Working Papers 120, OECD Publishing.
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- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables
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