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, as Central European countries characterized by strong regulation of their private pension fund industries. The paper contributes to the existing literature in the following ways. First, it is among the first papers to provide empirical evidence on the performance of pension funds in the two Central European countries. Second, it complements the available evidence on performance of pension funds operating in lax regulatory environments and guided by "prudent man'' laws by analyzing the performance of pension funds acting under much stricter regulations. Third, since the details of the regulations differ across the countries', the paper will provide valuable evidence on the effect of the regulations on pension funds' portfolio composition in these countries. Fourth, we believe that the paper's findings will have important implications for policy makers and pension fund managers in the Central European countries.

Keywords: Pension fund management, investment and performance regulation, performance measurement, Central European stock markets, Emerging Markets

JEL Classification: G23, G28