DOES PENSION FUNDS INVESTMENT AFFECT NIGERIAN CAPITAL MARKET?

Abstract This study examined whether or not Pension Fund Investment has an impact on Nigerian Capital Market (equity and bonds) using data 2010Q1 - 2023Q1. The study adopted secondary (i.e. time series) data obtained from sources like Central Bank of Nigeria (CBN), Debt Management Office (DMO), Nigerian Exchange Group (NGX) and National Pension Commission (PenCom) quarterly reports. Four variables were used in the study which were debt outstanding (Dout), Market Capitalization of stock (MKT), Pension Fund Assets (PFA) and Monetary Policy Rate (MPR). The variables were subjected to unit root test and they were all stationary at different order of I(0) and I(1). Since the Variables were not all stationary at level but a mixed series, the ARDL bound test of cointegration was used to test for cointegration among them. Using the bound test, the variables were found to be cointegrated at 5% level of significance. The ARDL result indicated that; Pension Fund Investments and other independent variables has a significant impact on the capital (Debt and Equity). From the findings the study recommended that the governments should ensure the sustainability of the Contributory Pension Scheme to have a pool of funds that can provide long-term financing to both the public and private sectors of the economy. The study also recommends adequate regulations of the investments of the pension funds’ assets for the benefit of the contributors. JEL Classification: G1, G230, G240.