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Assessment of Investment Regulation and its Effectiveness in the Latvian State Funded Pension Scheme

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  • Markuss Bergitis

    (Latvijas Banka)

Abstract

This paper assesses the effectiveness of investment limits in the Latvian state funded pension scheme and their impact on portfolio diversification, investment opportunities, and investments in the Latvian capital market. Using qualitative analysis of legal provisions and quantitative multi-factor regression, the study finds that strict concentration limits – particularly on individual equity holdings – restrict investments in the Latvian economy and might hinder exposure to key risk factors such as size and value. Policy recommendations include easing concentration and exposure limits, adopting a look-through approach for investments in investment funds, and expanding access to alternative assets.

Suggested Citation

  • Markuss Bergitis, 2025. "Assessment of Investment Regulation and its Effectiveness in the Latvian State Funded Pension Scheme," Discussion Papers 2025/02, Latvijas Banka.
    • Handle: RePEc:ltv:dpaper:202502
    as

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    File URL: https://datnes.latvijasbanka.lv/papers/DP_2_2025_EN.pdf
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    References listed on IDEAS

    as
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    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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