Wouldn’t withdrawing from your 401k and transferring it to a checking account limit the pool of funds available for equity investment and move it into lower risk assets?
The money in your checking account is still available for lending. Most every dollar on deposit with a "bank" remains available for that bank to use/leverage/loan. Money isn't really parked until you stash it as cash under your mattress.
> Wouldn’t withdrawing from your 401k and transferring it to a checking account limit the pool of funds available for equity investment and move it into lower risk assets
Yes, at the margins. But these are still financial effects. When a capital project is delayed because the bank they hired to sell stock came back with a lower price after talking to the retiree’s asset manager, that’s a real effect.