Effect of Pensions on the Capital Market

This study analyzes the impact of public and private pensions on the capital market to examine the empirical arguments for the need for pension development. To this end, we conduct an empirical analysis of the effect of pension assets on the capital markets in 17 OECD member countries. The methods comprise static and dynamic panel analyses, which are conducted in parallel based on panel data on the stock and bond markets and the asset sizes of the public and retirement pensions in the analyzed countries between 2001 and 2019. The results confirm that pensions positively impact stock markets. Furthermore, pensions positively impact the development of bond markets, while the impact of private pensions is greater than that of public pensions. These results reconfirm that the development of public and private pensions is the foundation for capital market growth. Additionally, they suggest that pensions and capital markets will develop together.