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Creating Compensation Funds: World Experience

Yury A. Danilov – Leading Researcher of the Russian Presidential Academy of National Economy and Public Administration, Candidate of Economic Sciences (Moscow, Russia). E-mail: This email address is being protected from spambots. You need JavaScript enabled to view it.

The article discusses the patterns of formation of compensation funds in the modern world, primarily in countries with emerging financial markets. Based on a review of a number of country cases, it is shown that the most important features of compensation systems in countries with developing financial markets are: active indirect participation of the state in creating compensation funds and active participation of national stock exchanges in the formation of sources of compensation funds. It seems that these two characteristic features of the formation of compensation funds (compensation systems) in countries with developing financial markets are indispensable conditions for the success of compensation system projects in such countries.

Key words: compensation fund, compensation systems, investor protection, household savings, stimulating long-term investments, transaction costs, securities, Stock Exchange, retail investors.