ABSTRACT
This chapter explains that the pension system determines financial development and presents this as the pension fund hypothesis. It analyses the relationship between pension funds and financial development using cross-sectional, time series and panel data. The first academic contribution of this chapter is that it is one of the first studies to consider three factors: legal origin, resource endowment and the pension system, in a cross-sectional analysis of financial development. We find that different pension systems have different impacts on financial development. The chapter argues that in addition to the religious and cultural view and the political and militaristic view on the differences in financial development, the pension fund view can provide another explanation that is particularly useful for these exceptional countries. Here, we use empirical analysis on cross-sectional data, panel data and time series data; the results show that our hypothesis is valid.
