Financial Context behind Ageing Society

Abstract

THE AIM OF THE PAPER

The aim of the study is to highlight the complex financial processes, how ageing society transforms the financial world, how it affects risk attitude, risk-return trade offs, the willingness to save, investments, productivity, consumption, asset prices, financial intermediation, fiscal balance and monetary policy.

METHODOLOGY

The methodology of the study is an in-depth literature survey to reveal the dominant research trends and questions.

MOST IMPORTANT RESULTS

The most important findings of the article is that ageing leads to fiscal imbalances, it modifies the efficiency of monetary transmission, it increases the demand for riskfree investments, including the growth of bank deposits in the banking sector, and it puts a pressure on the pension systems. Owing to health risks, the health related expanses appear as negative capital in the household portfolios of the elderly, and the transfers within the families are more prevelant in low income cohorts of the society.

RECOMMENDATIONS

Based on the research findings, the recommendation is as follows: it is advisable for the financial intermediaries to develop metrics to quantify the generational risks.