Does ownership moderate the effects of size on pension funds’ efficiency and investment performance?

Lintang Putri, Imanuel Madea Sakti, Apriani Dorkas Rambu Atahau


This study aims to explore the effect of specific characteristics of pension funds: size, efficiency, and ownership on pension fund performance. Specifically, it aims to obtain empirical evidence of whether pension fund ownership moderates the effect of size and efficiency on pension fund performance. We use annual financial statements obtained from the Indonesian Pension Fund Association (ADPI) for the period 2013-2017. The sampling technique generates the final sample of 167 pension funds and number of observations 835 firm-year. Using panel regression, we find that pension fund size has no significant positive effect on pension funds efficiency and investment performance. In addition, ownership does not moderate the effect of pension fund size on the efficiency and investment performance of pension funds. We suggest that large pension funds do not necessarily generate revenues higher than investment costs. Hence, our results inform the Financial Service Authority (FSA) to encourage pension funds to utilize their large size to generate higher revenues and exhibit more positive performance.

JEL Classification: G22, G32




Efficiency; Pension funds; Performance; Return on investment; Size

Full Text:



Akhigbe, A., McNulty, J. E., & Stevenson, B. A. (2017). Does the form of ownership affect firm performance? Evidence from US bank profit efficiency before and during the financial crisis. Quarterly Review of Economics and Finance, 64, 120–129.

Andonov, A., Eichholtz, P., & Kok, N. (2014). Intermediated investment management in private markets: Evidence from pension fund investments in real estate. Journal of Financial Markets, 22, 73–103.

Anwar, M. (2019). Cost efficiency performance of Indonesian Banks over the recovery period: A stochastic frontier analysis. Social Science Journal, 56(3), 377–389.

Atahau, A. D. R. (2016). Loan portfolio composition and performance of Indonesian Banks: does ownership matter?. Jurnal Keuangan dan Perbankan, 20(2).

Bikker, J. A. (2015). Is there an optimal pension fund size ? A scale-economy analysis of administrative costs. The Journal of Risk and Insurance, 84(2), 739-769.

Boon, L. N., Brière, M., & Rigot, S. (2018). Regulation and pension fund risk-taking. Journal of International Money and Finance, 84, 23–41.

Broeders, D. W. G. A., van Oord, A., & Rijsbergen, D. R. (2016). Scale economies in pension fund investments: A dissection of investment costs across asset classes. Journal of International Money and Finance, 67, 147–171.

Fang, J., Lau, C. K. M., Lu, Z., Tan, Y., & Zhang, H. (2019). Bank performance in China: A perspective from bank efficiency, risk-taking, and market competition. Pacific-Basin Finance Journal, 56, 290–309.

Galagedera, D. U. A., & Watson, J. (2015). Benchmarking superannuation funds based on relative performance. Applied Economics, 47(28), 2959–2973.

Giannetti, M., & Laeven, L. (2009). Pension reform, ownership structure, and corporate governance: Evidence from Sweden. The Review of Financial Studies, 22(10), 4091–4127.

Gujarati, N. D., & Porter, C. D. (2009). Basic Econometrics (Fifth Edit). The McGraw-Hill.

Handoko, D. (2015). Effect of pension funds, asset size, and return on assets of investment portfolio pension fund. Business and Entrepreneurial Review, 14(2), 127–148.

Hosseinzadeh, A., Smyth, R., Valadkhani, A., & Le, V. (2016). Analyzing the efficiency performance of major Australian mining companies using bootstrap data envelopment analysis. Economic Modelling, 57, 26–35.

Jackowicz, K., & Kowalewski, O. (2012). Crisis, internal governance mechanisms, and pension fund performance: Evidence from Poland. Emerging Markets Review, 13(4), 493–515.

Jackwerth, J. C., & Slavutskaya, A. (2016). The total benefit of alternative assets to pension fund portfolios. Journal of Financial Markets, 31, 25–42.

McDowell, A., & StataCorp. (2020). R-squared after XTGLS. Retrieved from:

Mohan, N., & Zhang, T. (2014). An analysis of risk-taking behavior for public defined benefit pension plans. Journal of Banking and Finance, 40(1), 403–419.

Paradi, J. C., & Zhu, H. (2013). A survey on bank branch efficiency and performance research with data envelopment analysis. Omega (United Kingdom), 41(1), 61–79.

Rosananda, T. L., & Hadi, S. (2018). Analisis portofolio optimal investasi dana pensiun di Indonesia. Ilmu Ekonomi, 2(3), 514–528.

Sharasanti, D. A., & Prayitno, R. H. (2017). Analisis penilaian kinerja keuangan pada dana pensiun Universitas Surabaya. Jurnal Bisnis Terapan, 1(01), 1–12.

Sonza, I. B., & Granzotto, A. (2018). Are pension funds good monitors?. RAUSP Management Journal, 53(2), 190–201.

Sparta, S. (2017). Analisis pengaruh efisiensi dan kecukupan modal terhadap kinerja keuangan pada bank pembangunan daerah di Indonesia. Jurnal Ekonomi dan Bisnis, 20(1), 83–111.

Woidtke, T. (2002). Agents watching agents?: Evidence from pension fund ownership and firm value. Journal of Financial Economics, 63(1), 99–131.



  • There are currently no refbacks.

Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)

Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang

Published by University of Merdeka Malang

Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 813-3180-1534

This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0