Pension Fund Investments Raise Firm Productivity and Innovation

Pension funds potentially have an important role to play in financing companies’ growth. Using detailed data from Denmark, this column shows a positive effect of pension fund investment on firm productivity which tends to increase with the size of the investment in the firm and the length of its duration. Privately held firms benefit more from pension fund investments than publicly listed firms. Finally, pension funds also help companies improve innovation activities. These results highlight two main economic channels: long-term investment commitment and capital provision.