PENSION FUND, DOMESTIC DEBT AND CAPITAL MARKET DEVELOPMENT IN NIGERIA

ABSTRACT

This study examines the effect of Pension Fund and Domestic debt on capital market development in Nigeria for the period 1985 to 2022. In particular, descriptive statistics, correlation coefficient and multivariate ordinary least squares (OLS) techniques were utilized in the evaluation of the model stated in the study while the data were estimated using the Eviews 9.0 econometric statistical package. In general, one of the pension fund variable, specifically, ratio of pension fund to GDP (PFGDP) and domestic debt (DD) tends to affect the development of the capital market while total pension assets (PFUM) was determined to not be pivotal in the development of the Nigerian capital market. The ratio of pension fund to GDP (PFGDP) has positive and significant impact on capital market development, thereby suggesting that ratio of pension fund to GDP is a key factor that influences the development of the capital market in Nigeria. Based on the findings, the study recommends that since pension fund to GDP and domestic debt exerted a positive and significant impact on capital market development, government should continue to increase the country’s level of domestic debt, it should do so within the set ceiling and the funds should be used in productive economic activities such as long-term infrastructural projects. This would promote the country’s economic health in the long run, eventually fostering capital market development. Also, the ongoing reform in the pension fund administration in Nigeria should be strengthening so that it will continue to stimulate the development of the capital market. Also, since the study found that pension  fund assets is not a key factors that influences the development of capital market in Nigeria, hence less attention should be given to this aspect of pension fund.