Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions

The link between pension reform, and capital market development, has become a perennial question, raised every time the potential benefits, and pre-conditions of pension reform are discussed. The author asks two questions. First, what are the basic...

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Main Author: Vittas, Dimitri
Format: Policy Research Working Paper
Language:English
en_US
Published: World Bank, Washington, DC 2014
Subjects:
Online Access:http://documents.worldbank.org/curated/en/2000/08/693246/pension-reform-capital-market-development-feasibility-impact-preconditions
http://hdl.handle.net/10986/19799
id okr-10986-19799
recordtype oai_dc
spelling okr-10986-197992021-04-23T14:03:46Z Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions Vittas, Dimitri AGENCY PROBLEMS ASSET MANAGEMENT ASSET MANAGERS ASSETS BANK DEPOSITS BOND MARKETS BONDS BUDGET DEFICITS CAPITAL MARKET CAPITAL MARKET DEVELOPMENT CAPITAL MARKETS COMMERCIAL BANKS COMPETITIVE BIDDING CONTRACTUAL SAVINGS CORPORATE GOVERNANCE CORPORATE MANAGEMENT DEBT DEBT INSTRUMENTS DEREGULATION DERIVATIVE PRODUCTS DIRECT INVESTMENT DISABILITY INSURANCE DISABILITY PENSIONS DOMESTIC MARKETS ECONOMIC INTEGRATION EQUITY CAPITAL EXTERNAL ASSET MANAGERS FINANCIAL ASSETS FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL INSTRUMENTS FINANCIAL MARKETS FINANCIAL RESOURCES FINANCIAL SECTOR GDP GOVERNMENT BONDS INDEXATION INDIVIDUAL INVESTORS INFLATION INSTITUTIONAL DEVELOPMENT INSTITUTIONAL INVESTORS INSURANCE INSURANCE COMPANIES INSURANCE MARKETS INVESTMENT BANKS INVESTMENT DECISIONS INVESTMENT PERFORMANCE INVESTOR PROTECTION LIFE INSURANCE LIFE INSURANCE COMPANIES LIFETIME EARNINGS LIQUIDITY MACROECONOMIC STABILITY MONOPOLIES MUTUAL FUNDS NORMAL RETIREMENT AGE PAYROLL TAXES PENSION FUND PENSION FUNDS PENSION PLANS PENSION REFORM PENSION REFORMS PENSION SCHEMES PENSION SYSTEMS PENSIONERS POSITIVE EFFECTS PRIVATE PENSION PRIVATE PENSION FUNDS PRIVATE PILLAR PRIVATIZATION PROVIDENT FUNDS RATING AGENCIES REGULATORY FRAMEWORK REGULATORY STRUCTURES RETIREMENT SECURITIES SECURITIES MARKETS SIDE EFFECTS SOCIAL SECURITY SOCIAL SECURITY SYSTEMS SUPERVISORY AGENCY The link between pension reform, and capital market development, has become a perennial question, raised every time the potential benefits, and pre-conditions of pension reform are discussed. The author asks two questions. First, what are the basic "feasibility" pre-conditions for the successful launch of a pension reform program? And second, what are the necessary "impact" pre-conditions for the realization of the potential benefits of funded pension plans for capital market development? His main conclusion is that the feasibility pre-conditions, are not as demanding as is sometimes assumed. In contrast, the impact pre-conditions are more onerous. The most import feasibility pre-condition is a strong, and lasting commitment of the authorities to maintaining macroeconomic, and financial stability, fostering a small core of solvent, and efficient banks, and insurance companies, and creating an effective regulatory, and supervisory agency. Opening the domestic banking, and insurance markets to foreign participation, can easily fulfill the second requirement. The main impact pre-conditions include the attainment of critical mass; the adoption of conducive regulations, especially on pension fund investments; the pursuit of optimizing policies by the pension funds; and, a prevalence of pluralistic structures. The author argues that pension funds are neither necessary, nor sufficient for capital market development. Other forces, such as advances in technology, deregulation, privatization, foreign direct investment, and especially regional, and global economic integration, may be equally important. But pension funds are critical players in "symbiotic" finance, the simultaneous and mutually reinforcing presence of many important elements of modern financial systems. They can support the development of factoring, leasing, and venture capital companies, all of which specialize in financing new, and expanding small firms. 2014-08-27T21:14:40Z 2014-08-27T21:14:40Z 2000-08 http://documents.worldbank.org/curated/en/2000/08/693246/pension-reform-capital-market-development-feasibility-impact-preconditions http://hdl.handle.net/10986/19799 English en_US Policy Research Working Paper;No. 2414 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
en_US
topic AGENCY PROBLEMS
ASSET MANAGEMENT
ASSET MANAGERS
ASSETS
BANK DEPOSITS
BOND MARKETS
BONDS
BUDGET DEFICITS
CAPITAL MARKET
CAPITAL MARKET DEVELOPMENT
CAPITAL MARKETS
COMMERCIAL BANKS
COMPETITIVE BIDDING
CONTRACTUAL SAVINGS
CORPORATE GOVERNANCE
CORPORATE MANAGEMENT
DEBT
DEBT INSTRUMENTS
DEREGULATION
DERIVATIVE PRODUCTS
DIRECT INVESTMENT
DISABILITY INSURANCE
DISABILITY PENSIONS
DOMESTIC MARKETS
ECONOMIC INTEGRATION
EQUITY CAPITAL
EXTERNAL ASSET MANAGERS
FINANCIAL ASSETS
FINANCIAL CRISES
FINANCIAL CRISIS
FINANCIAL INSTITUTIONS
FINANCIAL INSTRUMENTS
FINANCIAL MARKETS
FINANCIAL RESOURCES
FINANCIAL SECTOR
GDP
GOVERNMENT BONDS
INDEXATION
INDIVIDUAL INVESTORS
INFLATION
INSTITUTIONAL DEVELOPMENT
INSTITUTIONAL INVESTORS
INSURANCE
INSURANCE COMPANIES
INSURANCE MARKETS
INVESTMENT BANKS
INVESTMENT DECISIONS
INVESTMENT PERFORMANCE
INVESTOR PROTECTION
LIFE INSURANCE
LIFE INSURANCE COMPANIES
LIFETIME EARNINGS
LIQUIDITY
MACROECONOMIC STABILITY
MONOPOLIES
MUTUAL FUNDS
NORMAL RETIREMENT AGE
PAYROLL TAXES
PENSION FUND
PENSION FUNDS
PENSION PLANS
PENSION REFORM
PENSION REFORMS
PENSION SCHEMES
PENSION SYSTEMS
PENSIONERS
POSITIVE EFFECTS
PRIVATE PENSION
PRIVATE PENSION FUNDS
PRIVATE PILLAR
PRIVATIZATION
PROVIDENT FUNDS
RATING AGENCIES
REGULATORY FRAMEWORK
REGULATORY STRUCTURES
RETIREMENT
SECURITIES
SECURITIES MARKETS
SIDE EFFECTS
SOCIAL SECURITY
SOCIAL SECURITY SYSTEMS
SUPERVISORY AGENCY
spellingShingle AGENCY PROBLEMS
ASSET MANAGEMENT
ASSET MANAGERS
ASSETS
BANK DEPOSITS
BOND MARKETS
BONDS
BUDGET DEFICITS
CAPITAL MARKET
CAPITAL MARKET DEVELOPMENT
CAPITAL MARKETS
COMMERCIAL BANKS
COMPETITIVE BIDDING
CONTRACTUAL SAVINGS
CORPORATE GOVERNANCE
CORPORATE MANAGEMENT
DEBT
DEBT INSTRUMENTS
DEREGULATION
DERIVATIVE PRODUCTS
DIRECT INVESTMENT
DISABILITY INSURANCE
DISABILITY PENSIONS
DOMESTIC MARKETS
ECONOMIC INTEGRATION
EQUITY CAPITAL
EXTERNAL ASSET MANAGERS
FINANCIAL ASSETS
FINANCIAL CRISES
FINANCIAL CRISIS
FINANCIAL INSTITUTIONS
FINANCIAL INSTRUMENTS
FINANCIAL MARKETS
FINANCIAL RESOURCES
FINANCIAL SECTOR
GDP
GOVERNMENT BONDS
INDEXATION
INDIVIDUAL INVESTORS
INFLATION
INSTITUTIONAL DEVELOPMENT
INSTITUTIONAL INVESTORS
INSURANCE
INSURANCE COMPANIES
INSURANCE MARKETS
INVESTMENT BANKS
INVESTMENT DECISIONS
INVESTMENT PERFORMANCE
INVESTOR PROTECTION
LIFE INSURANCE
LIFE INSURANCE COMPANIES
LIFETIME EARNINGS
LIQUIDITY
MACROECONOMIC STABILITY
MONOPOLIES
MUTUAL FUNDS
NORMAL RETIREMENT AGE
PAYROLL TAXES
PENSION FUND
PENSION FUNDS
PENSION PLANS
PENSION REFORM
PENSION REFORMS
PENSION SCHEMES
PENSION SYSTEMS
PENSIONERS
POSITIVE EFFECTS
PRIVATE PENSION
PRIVATE PENSION FUNDS
PRIVATE PILLAR
PRIVATIZATION
PROVIDENT FUNDS
RATING AGENCIES
REGULATORY FRAMEWORK
REGULATORY STRUCTURES
RETIREMENT
SECURITIES
SECURITIES MARKETS
SIDE EFFECTS
SOCIAL SECURITY
SOCIAL SECURITY SYSTEMS
SUPERVISORY AGENCY
Vittas, Dimitri
Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
relation Policy Research Working Paper;No. 2414
description The link between pension reform, and capital market development, has become a perennial question, raised every time the potential benefits, and pre-conditions of pension reform are discussed. The author asks two questions. First, what are the basic "feasibility" pre-conditions for the successful launch of a pension reform program? And second, what are the necessary "impact" pre-conditions for the realization of the potential benefits of funded pension plans for capital market development? His main conclusion is that the feasibility pre-conditions, are not as demanding as is sometimes assumed. In contrast, the impact pre-conditions are more onerous. The most import feasibility pre-condition is a strong, and lasting commitment of the authorities to maintaining macroeconomic, and financial stability, fostering a small core of solvent, and efficient banks, and insurance companies, and creating an effective regulatory, and supervisory agency. Opening the domestic banking, and insurance markets to foreign participation, can easily fulfill the second requirement. The main impact pre-conditions include the attainment of critical mass; the adoption of conducive regulations, especially on pension fund investments; the pursuit of optimizing policies by the pension funds; and, a prevalence of pluralistic structures. The author argues that pension funds are neither necessary, nor sufficient for capital market development. Other forces, such as advances in technology, deregulation, privatization, foreign direct investment, and especially regional, and global economic integration, may be equally important. But pension funds are critical players in "symbiotic" finance, the simultaneous and mutually reinforcing presence of many important elements of modern financial systems. They can support the development of factoring, leasing, and venture capital companies, all of which specialize in financing new, and expanding small firms.
format Publications & Research :: Policy Research Working Paper
author Vittas, Dimitri
author_facet Vittas, Dimitri
author_sort Vittas, Dimitri
title Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
title_short Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
title_full Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
title_fullStr Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
title_full_unstemmed Pension Reform and Capital Market Development : "Feasibility" and "Impact" Preconditions
title_sort pension reform and capital market development : "feasibility" and "impact" preconditions
publisher World Bank, Washington, DC
publishDate 2014
url http://documents.worldbank.org/curated/en/2000/08/693246/pension-reform-capital-market-development-feasibility-impact-preconditions
http://hdl.handle.net/10986/19799
_version_ 1764441427190743040