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Industria de AFP Chilena: ¿Cuánto Gana y Cuánto Debería Ganar?

Author

Listed:
  • Fernando Lopez

    (Universidad Alberto Hurtado)

Abstract

Over more than two decades, both experts and the public have considered that profits earned by Chilean Pension Fund Administrators (AFP for its acronym in Spanish) are excessively high. However, there is little known about how much the industry should earn in equilibrium. In this paper, I show that the 25.4% return on equity (ROE) earned by the AFP industry over 2006-2015 was 4.8 times as high as the 5.3% that can be explained by its exposure to market risk. In monetary terms, out of the US$ 4.4 billion earned by the AFP industry over the last decade, nearly $ 3.5 billion can be considered as "excessive".

Suggested Citation

  • Fernando Lopez, 2016. "Industria de AFP Chilena: ¿Cuánto Gana y Cuánto Debería Ganar?," Revista de Analisis Economico – Economic Analysis Review, Universidad Alberto Hurtado/School of Economics and Business, vol. 31(2), pages 101-114, October.
    • Handle: RePEc:ila:anaeco:v:31:y:2016:i:2:p:101-114
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    More about this item

    Keywords

    Chilean Pension Fund Administrators (AFP); AFP's industry profits; competition;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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