PENSION FUNDS AND CAPITAL MARKET DEVELOPMENT IN NIGERIA

Abstract

This study examines the effect of pension funds on capital market development in Nigeria. An ex-post facto research design was employed for this study.Secondary data were collected from Central Bank of Nigeria Statistical Bulletin for forty-eight quarter periods spanning through 2008Q1 to 2019Q4. Employing the econometric methodology of the Johansen Cointegration and Vector Error Correction Model (VECM), the study shows long run relationships among the variables. The result shows that pension contributory funds have no significant effect on capital market development in Nigeria, while pension investment has significant effect on capital market development in Nigeria.The study recommends thatgovernment through its policy making should encourage more investment of the fallow pension funds into lucrative securities in the capital market. This will enhance the development of the capital market and further develop the financial sector which will in turn translate to the growth and development of the economy. Furthermore, voluntary contributions into the pension funds should be encouraged so as to the funds that will be available for investment in the capital market.