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Pension Fund Investment Exploration Of The Operational Risk Management

Posted on:2003-10-17Degree:MasterType:Thesis
Country:ChinaCandidate:Y F LiuFull Text:PDF
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Since 1990's, the investment management of pension funds is one of the hot issues in the social security research, accordingly the risk management of pension funds investment being put on the order of the day. Based on this point, pulsing a willingness to contribute my energy to risk management in China, I choose "risk management in the investment operation of pension fund" as the topic of my research, attempting to analyze and discuss the risk management of pension fund investment comprehensively and profoundly in the theoretical and practical levels.Based on the reality of current Chinese political, economic and social systems, taking the capital market in our country as research platform, the author constructs logical architecture of this paper according to kinds of risks that may be confronted with in pension fund investment operation. Analyzing prevailing problem, exploring the settle ways, and discussing the theoretical and practical problems in the risk management of pension fund investment in China. These are the expected objects of why to write this paper.The article is divided into three parts. Chapter one mainly analyzes the risks faced in the pension fund investment. The first part is necessary preparation for the discussion of the second part. The content of chapter two is the core of the article, which is structuring the risk management mechanism of pension fund investment in China. The chapter three is roughly researching on pension fund investing in the stock market. Since it is a more disputable topic, it is discussed independently.Because pension fund invests in the capital market, the degree of the completeness and maturity of capital market manipulates the realization of investment profit directly. Thus a better understanding on capital market risk has significant meaning to investment-policy decision. Because capital market has many defects such as unbalanced structure,inappropriateness of management, improper supervision etc, it enlarges the investment risk. Furthermore the important part of capital market - the security market has greater risks. The risk in security market can be divided into system risk and non-system risk. The system risk can be distributed through portfolio management, while it won't be dodged for the non-system risk by investing in diversification. Non-system risks display in breaking up the market in man-made, equities can't flow freely, foam economy appears in stock market, and security trade system is not sound. System risks in stock market are management risk and finance risk.Generally speaking, pension fund invests in securities, mortgage loan, real estate and oversea investment. The pension fund in the west-developed countries is invested chiefly in securities. It is strictly restricted on the pension fund investment in China. The only invest instrument that can be selected are treasury bonds and deposits, any risky instrument can't be used. Under the pressure of preservation and appreciation of the pension funds and investment environment taking a favorable turn, it is the general trend of loosening investment restrictions and permitting pension fund to invest in various instruments. Thus security market will be the active field of investment. Security investments include stock investment and bonds investment. Different instrument faced different risks. Bonds investment faces interest rate risk, reinvesting risk, breaking contract risk, and inflation risk, while stock instruments face dividend indefinite risk and price indefinite risk. After understanding the nature of risks, it is the important step in risk management to measure the risk. Risk measurement of security tools can adopt quantitative analysis and target analysis. The third part of this chapter discusses the agency problem that existed in pension fund investment management. Pension fund management can adopt three formats: direct investment format, partialdelegation format and complete delegation format. In the late two formats, there exists agency problem. While in t...
Keywords/Search Tags:pension fund, investment operation, risk, risk management
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