Efficiency assessment of Baltic pension Fund management companies

Abstract

Purpose. This research paper focuses on the operational efficiency of Baltic pension fund management companies from the perspective of competitiveness of small and medium-size companies with no or low exposure to non-pension fund management business compared to other companies in the marketplace. The purpose is to assess whether small and medium-size pension fund management companies operating in Estonia, Latvia and Lithuania are capable of competitive efficiency compared to companies with bigger assets under management and a bigger share of non-pension fund management income.

Methods. The methods used in the empirical part of the research are: data envelopment analysis as well as main trend analysis, cluster analysis, development indicators, relative and absolute indicators. Data used for empirical research are from pension fund management companies in Latvia, Lithuania and Estonia. The research period covers the post-financial crisis years from 2009 to 2014.

Findings. The research outcome is reasoning why non-diversified small and medium-size pension fund management companies are capable of achieving competitive efficiency compared to their peers with bigger assets under management, which can be both non-diversified as well as more diversified companies.

Originality. In the context of a general lack of studies on the topic in the Baltic countries, the research paper provides a comprehensive quantitative assessment of the efficiency of pension fund management companies in the region with a focus on competitiveness of small and medium-size companies.