The Impact of the Pension System on Financial Development in Selected Countries

One of the basic strategies of countries is to achieve higher financial development, which is used for economic growth. The expansion and deepening of the financial market leads to The expansion of its development over time. The stock market is one of the financial markets in which the performance of pension fund investments increases capital inflows, which can have major effects on this market and ultimately lead to its development. In this paper, we used panel data for 40 countries, including Iran, to examine the impact of pension assets on financial development for two groups of countries with Pay-as-you-go (PAYG) and fully-funded (FF) pension systems using FGLS estimation method in the period 1995 to 2019. The results showed that pension assets have a positive and significant effect on financial development in both types of pension systems. It was also observed that the impact of pension assets on financial development in the FF pension system is greater and stronger than the PAYG pension system.The results showed that pension assets have a positive and significant effect on financial development in both types of pension systems. It was also observed that the impact of pension assets on financial development in the FF pension system is greater and stronger than the PAYG pension system.