Pension funds and financialisation in the European Union.

Bonizzi, Bruno and Churchill, Jennifer (2017) Pension funds and financialisation in the European Union. Revista de Economía Mundial, 46. pp. 71-90. ISSN 1576-0162

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Abstract

The expansion and innovation of financial markets, commonly known as financialisation, is closely linked to the growth of pension funds. While the conventional narrative is based on the notion of financial development as a positive change, this paper argues that pension funds may induce demand-led pressures on the financial system, generating potential for systemic risk and instability. The rise of pension funds is therefore important for the process of financialisation, as these institutions’ demand for assets continuously sparks growth and innovation in financial markets. In the current context pension funds are attempting to reduce risk by rebalancing their allocations away from equities towards ‘alternatives’, such as hedge funds and private equity. Coupled with the current regulatory trends towards risk-based funding regulation, we argue that pension funds are unlikely to be a stabilising force in financial markets today.

Item Type: Article
Uncontrolled Keywords: Pension funds, Risk, Financial innovation, Alternative assets, Financialisation
Subjects: L Social studies > L100 Economics
L Social studies > L111 Financial economics
L Social studies > L113 Economic policy
L Social studies > L150 Political economics
Departments: Faculty of Humanities and Social Sciences > History
Depositing User: Bruno Bonizzi
Date Deposited: 12 Oct 2016 08:09
Last Modified: 24 Oct 2017 14:13
URI: http://repository.winchester.ac.uk/id/eprint/340

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