The role of pension funds as sustainable institutional investors: An empirical analysis of their influence on the capital market

Mitreva, Mila (2023) The role of pension funds as sustainable institutional investors: An empirical analysis of their influence on the capital market. In: Montenegrin International Conference on Economics and Business 2023, 25-27 May 2023, Budva.

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Abstract

Today’s financial market conditions require sustainable investment practices. However, for better functioning of the
financial system, it must be considered which financial players can have positive effect. The pension funds, as the
major institutional investors, are one of the most important players in the global capital markets. Their investment
behavior is mainly determined by the economic conditions and circumstances. Nevertheless, their status as the key
drivers of the global market is indisputable. Therefore, this paper aims to provide an analysis of the impact of the
assets of the pension funds on the capital market. In the study, an economic model has been created, where the
dependent variable is the market capitalization as a percentage of GDP and the independent variables are the
pension fund assets as a percentage of GDP, GDP per capita growth and inflation. The results showed statistically
significant independent variables, where the assets of the pension funds have a positive effect on market
capitalization, while market capitalization has a positive effect on GDP per capita growth. This paper also includes
supplementary descriptive analysis of pension funds’ investment activities in sustainable projects. Sustainable
investment has proven to provide long-term positive effect on the financial returns. Nevertheless, in the current,
competitive financial markets, aligning the investment goals of the investors with their values can contribute to the
development of new technologies, while reducing the negative effect on the environment and at the same time promoting social responsibility. Global challenges regarding the climate change, inequality and the rapid pace of technological development can be addressed through modernized efforts and new strategic approached. In this
context, sustainable investments can be directed towards these global challenges, hence, with generating better
environmental outcomes.

Item Type:	Conference or Workshop Item (Other)
Subjects:	Social Sciences > Economics and business
Divisions:	Faculty of Economics
Depositing User:	Mila Mitreva
Date Deposited:	29 May 2023 10:14
Last Modified:	29 May 2023 10:14
URI:	https://eprints.ugd.edu.mk/id/eprint/31827

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