MARKET RISK AND THE PERFORMANCE OF THE NIGERIAN PENSION FUND

ABSTRACT

This study empirically investigated the relationship between market risk and financial performance of the Nigerian pension funds for the period 2009 to 2022 (14 years). The specific objectives of the study were to find out whether interest rate (INTR), exchange rate (EXR), gross domestic products (GDP) and inflation rate (INFR) have significant relationship with financial performance of pension funds. The fully modified least square (FMOLS) econometric technique was employed for the analysis of data. The results obtained therefrom indicate that interest rate (INTR) and inflation rate (INFR) has significant negative relationship with financial performance of pension funds. On the other hand, while exchange rate (EXR) has an insignificant negative relationship with financial performance of pension funds, gross domestic products (GDP) has significant positive impact on financial performance of pension funds (FPEN) in Nigeria. The study conclude that, in Nigeria, market risk variables such as interest rate (INTR), inflation rate (INFR) and gross domestic products (GDP) are the crucial factors influencing financial performance of pension funds (FPEN) in Nigeria over the period of investigation. The study recommends among others that, government should diverse a means of boosting current economic activities in the country because, with increased economic activities, insurance business will boom as more workers and business men will now have enough cash to spare to take advantage of pension funds policy of their choice. This in turn will increase the overall financial performance of pension funds in Nigeria.