IMPACT OF BONDS ON CAPITAL MARKET GROWTH IN NIGERIA

The capital market is the segment of the financial system, which facilitates the channeling of longterm funds from surplus to deficit economic units thereby stimulating capital formation and socioeconomic development. The capital market deals with longterm financial products such as loans, shares, bonds and credit that are used for productive activities. It is also the institution and mechanisms through which economic units desirous to invest their surplus fund interact directly or through financial intermediaries with those who wish to procure funds for their businesses. Therefore, the study determined the impact of bonds on capital market growth from 2000 to 2017. The study adopts descriptive research design while capital market growth was measured by market capitalization and bond was measured by federal government bond and corporate bond. It was discovered that federal government bond has significant relationship with market capitalization and it was discovered that corporate bond has significant relationship with market capitalization. The study recommends that the policy makers should encourage investments in Corporate Bonds by creating conducive investment environments, since the findings of this study showed that CB improved capital market growth. This can be done through a reduced treasury bill rates, as currently being witnessed, as investors would rather buy treasury bills at above 10% rather than CB which is less than 8%. In addition, the economic fundamentals of high inflation erodes the long term yield for investing in CB, therefore, regulators should develop policies that will reduce inflation.