EFFECT OF CONTRIBUTORY PENSION FUNDS ON CAPITAL MARKET PERFORMANCE IN NIGERIA

This study investigates the effect of contributory pension funds on capital market performance in Nigeria utilizing time series data extracted from pension commission and Nigerian Exchange Group covering 2005Q1 to 2019Q4. The specific objectives of the study were to examine the effect of pension funds investment in government securities, corporate securities and real estate property on capital market performance in Nigeria proxied with market capitalisation. The study employed ex post facto research design, stationarity test revealed on data were found to be stationary at first difference. Based on the stationarity result, the study conducts co-integration test using Johansen co-integration test. The cointegration test results showed that there is long run relationship among the variables. The results of the study revealed that pension funds investment in govenunent securities and corporate securities have significant positive effect on capital market performance in Nigeria both in the long and short run, while pension funds investment in real estate property has no significant effect on capital market performance in Nigeria in the long and short run. The study concludes that pension funds investments have positively affected stock market development in Nigeria. The study recommends that Pension funds administrators should allocate more assets and investment in Government securities. Also, pension funds administrators should invest more funds in relatively high corporate debt securities that offer high returns such as banks in order to deepen the capital market growth in Nigeria. Lastly, Pension Fund Administrators in Nigeria should gradually reduce exposure of their investment to real estate property as it has been revealed by this study that investment in real estate property has not improved the capital market performance in Nigeria.