THE ROLE OF PRIVATE PENSION SYSTEM IN FINANCIAL DEEPENING: AN EMPIRICAL APPLICATION ON TURKEY

Özet

The inadequacy of the social security system during retirement has led to a search for a new social security system. Thus, the private pension system emerged. In this respect, the private pension system complements the social security system. This system offers individuals the opportunity to supplement their retirement income by transferring savings earned during their working years into private pension funds. With this income, individuals can increase their standards and focus on investing. Thus, financial deepening, which refers to the diversification and proliferation of financial intermediaries and financial instruments, increases, and funds can be transferred between entrepreneurs seeking to invest and the private pension system. This study investigates the role of the private pension system in financial deepening in Turkey using quarterly data from 2006Q4 to 2024Q1. The study used M2 money supply as an indicator of financial deepening and the fund amount of private pension participants as an indicator of private pensions as variables. The analysis was conducted using the ARDL bounds test and the Granger causality test. The results indicate that an increase in the amount of Private Pension System funds increases financial deepening. The Granger causality test results also support this conclusion, indicating that the Private Pension System is a Granger causal factor for financial deepening. Therefore, increasing participation in the Private Pension System through government support and incentives will lead to increased funds, increased resources for the financial system, and financial deepening.

Abstract

The inadequacy of the social security system during retirement has led to a search for a new social security system. Thus, the private pension system emerged. In this respect, the private pension system complements the social security system. This system offers individuals the opportunity to supplement their retirement income by transferring savings earned during their working years into private pension funds. With this income, individuals can increase their standards and focus on investing. Thus, financial deepening, which refers to the diversification and proliferation of financial intermediaries and financial instruments, increases, and funds can be transferred between entrepreneurs seeking to invest and the private pension system. This study investigates the role of the private pension system in financial deepening in Turkey using quarterly data from 2006Q4 to 2024Q1. The study used M2 money supply as an indicator of financial deepening and the fund amount of private pension participants as an indicator of private pensions as variables. The analysis was conducted using the ARDL bounds test and the Granger causality test. The results indicate that an increase in the amount of Private Pension System funds increases financial deepening. The Granger causality test results also support this conclusion, indicating that the Private Pension System is a Granger causal factor for financial deepening. Therefore, increasing participation in the Private Pension System through government support and incentives will lead to increased funds, increased resources for the financial system, and financial deepening.

Yazarlar

Gaye UGUN, Gürçem ÖZAYTÜRK

Anahtar Kelimeler

Financial Deepening, Individual Retirement System, Türkiye

JEL Codes

G22, G41

Yayın Bilgileri

Cilt 5, Sayı 2, 2025 · Sayfa 15-27

DOI: 10.52898/ijif.2025.7

Dosyalar