CONTRIBUTION OF PENSION INDUSTRY INVESTMENT TO CAPITAL MARKET DEVELOPMENT IN NIGERIA

Abstract

This study examined the contribution of pension industry investment to capital market development in Nigeria. The specific objectives of the study were to assess the contribution of pension industry investment in federal government securities to capital market development in Nigeria and to examine the contribution of pension industry investment in state government securities to capital market development in Nigeria. The study was from 2007 to 2019, a period of thirteen years. An ex-post facto research design was applied in the study. The ordinary least square technique was used to test the hypotheses formulated. It was found that pension industry investment in federal government securities did not contribute significantly to capital market development in Nigeria. Also, pension industry investment in state government securities did not contribute significantly to capital market development in Nigeria. From the findings of the study, it was concluded that pension industry investment in federal and state government securities did not contribute significantly to capital market development in Nigeria. In line with the findings of the study, it was recommended that the pension industry should spread its investments beyond low-risk federal government financial instruments to widen its portfolio and aid a larger sphere of the capital market with its intermediation. Also, due to poor management and taking longer periods to yield return pension industry should not invest in state government bonds as it would tie down funds for a long time with low certainty of payback. State governments usually use funds generated from bonds to finance their deficits or to reward politically connected but inefficient investment projects without impacting the state's development or growth.