Exploring the Nexus Between Pension Funds and Stock Market Development - Does Country-level Governance Matter? Evidence from Global Economies
We examine whether country-level governance quality moderate the effect of pension funds on stock market development. Our sample consists of 16 countries, including developed and emerging countries, analysed during the period 1996-2016 using Common Correlated Mean Group and Augmented Mean Group techniques. The main findings show that, while the moderating effect of country-level governance is insignificant for the overall sample of countries, the effect is significant for some individual countries in the panel. This suggests in some economies, governance quality moderates the financial system mechanisms which influence the institutional investors’ decision to allocate the funds needed to develop the stock markets.