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ABSTRACT
This work evolved out of the need to provide the nexus between bond financing and financial viability using market capitalization MCAP as a proxy for financial viability in Nigeria. This study aims at ascertaining if there exist a significant effect of bond financing on financial viability of a nation. The data used for the analysis were gotten from World data Atlas and CBN statistical Bulletin (2018) covering the period of 28 years (1990 to 2018).
Based on the feature of endogenity of the variables, the VAR/VECM framework were employed via Eviews 9.0 to check how the short run equilibrium is adjusted into the long run. The granger causality test was employed using the Wald and block test including other supplementary diagnostic test like the impulse response, CUSUM squares and Inverse root of AR. The result reveals that bond financing significantly affects financial viability in Nigeria on the other hand, total stock traded and TBOND was found to have a bidirectional relationship with MCAP.
Summary and policy recommendations were presented in line with our stated objectives then conclusions were made. It was recommended that there is need for a deliberate policy by FGN through SEC that could spur the rapid growth and development of Nigeria. Also, the CBN through its monetary policy committee should improve its control on money as part of its monetary policy measure in order to ensure optimum level of money supply. Finally government needs to prioritize the application of bonds by laying more emphasis on financing capital projects, especially infrastructural development projects, rather than heavy reliance on financing budget deficit
