Integrating corporate ownership and pension fund structures: A general equilibrium approach

Abstract

. (2014) 'Integrating corporate ownership and pension fund structures : a general equilibrium approach.', Journal of banking nance., 49 . pp. 553-569. Further information on publisher's website:http://dx.doi.org/10.1016/j.jbank n.2014.05.032Publisher's copyright statement: NOTICE: this is the author's version of a work that was accepted for publication in Journal of Banking Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be re ected in this document. Changes may have been made to this work since it was submitted for publication. A de nitive version was subsequently published in Journal of Banking Finance, 49, December 2014, 10.1016/j.jbank n.2014.05.032. Additional information:Use policyThe full-text may be used and/or reproduced, and given to third parties in any format or medium, without prior permission or charge, for personal research or study, educational, or not-for-pro t purposes provided that:• a full bibliographic reference is made to the original source • a link is made to the metadata record in DRO • the full-text is not changed in any way The full-text must not be sold in any format or medium without the formal permission of the copyright holders.Please consult the full DRO policy for further details. AbstractThis paper studies pension fund design in the context of investment in the debt and equity of a firm. We employ a general equilibrium framework to demonstrate that: (i) the asset location puzzle is purely a risk neutral phenomenon that disappears with the introduction of sufficient risk aversion; (ii) the inability of policy makers to manage an economy with multiple firms yields a mixed equilibrium, where bonds are observed in both taxable and tax-deferred accounts; and (iii) the pareto-efficient pension plan comprises of a hybrid of defined benefit and defined contribution plans, exploiting the comparative advantages of both.

Can Yale Endowment Model Be Applied for Islamic Pension Fund?

“…The above explanation trigger the rationale behind the injunction of riba which has been explained by Ebrahim et al (2014) that ribawi contract is inefficient due to three main reasons: expropriation of wealth, financial fragility, and financial exclusion. Therefore, there is a need to figure out the alternative instrument including hybrid securities and life-cycle sukuk which further will be discussed by the well-respected Professor in Islamic Finance, Prof. Muhammad Shahid Ebrahim.…”