Financial Market Trends

OECD’s twice-yearly journal providing timely analyses and statistics on financial matters of topical interest and longer-term developments in specific financial sectors. Each issue provides a brief update of trends and prospects in the international and major domestic financial markets along with articles covering such topics as structural and regulatory developments in OECD financial systems, trends in foreign direct investment, trends in privatization, and financial sector statistics covering areas such as bank profitability, insurance, and institutional investors.

Periodically, a small number of articles within one field of financial sector developments – constituting the so-called special focus for the particular issue – may be included.


The Impact of Pension Funds on Financial Markets

This paper empirically explores the impact of pension funds on market volatility, equity prices, government and corporate bond yields for a panel of 24 countries. The results show a positive and statistically significant relationship between market volatility and pension assets. It complements micro evidence (Dennis and Strickland, 2002) as well as macro findings (Davis, 2004). In addition, equity prices are found to be positively correlated with pension funds, a finding observable for both OECD countries and emerging market economies (EMEs) and present in both the short and long terms. Furthermore, there is evidence indicating a negative link between pension fund assets and both corporate and government bond yields. This might be due to the sizeable buying effects of pension funds, particularly when governments have the tendency to use pension funds to finance implicit pension debts when the traditional pay-as-you-go systems shift to funded systems.


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