Pension Funds' Performance in Strongly Regulated Industries in Central Europe: Evidence from Poland and Hungary

Abstract

This paper presents an analysis of pension funds' performance in Poland and Hungary, two Central European countries characterized by strong regulation of their private pension fund industries. Thus, the paper extends the literature, which has so far mostly focused on the performance of pension fund industries facing no or limited regulation. We find that the performance of pension funds in the two studied countries differs. While we do not find convincing evidence of outperformance by Polish pension funds, we find strong evidence of underperformance by Hungarian pension funds. The results are robust to time variation. The paper considers possible explanations for these findings. The results of the paper should be of interest to policymakers seeking to achieve optimal performance of pension systems and to academics researching the area of pension funds.

Keywords:

• Central European stock markets
• emerging markets
• investment and performance regulation
• pension fund management
• performance measurement