TITLE:
How Does Pension Funds Impact Stock Market Development? An Empirical Analysis from Nigeria Using ARDL Technique
AUTHORS:
Sule Yakubu, Taiwo Adewale Muritala, Hauwa Lamino Abubakar, Akeem Adewale Bakare, Wasiu Akintunde Yusuf, Hafsat Olatanwa Afolabi
KEYWORDS:
Pension Fund, Capital Market Development, ARDL, Nigeria
JOURNAL NAME:
Open Journal of Social Sciences,
Vol.11 No.9,
September
27,
2023
ABSTRACT: The study examined the impact of pension funds on capital market
development in Nigeria from 1995-2022 using ex-post facto research design. Data
were collected from the Central Bank of Nigeria statistical bulletin and annual
report of the pension fund commission. Data were analyzed using descriptive
statistics, unit root test and auto regressive lag model (ARDL). The findings
show that there is a long run relationship between market capitalization as a
ratio of gross domestic product and selected pension fund variables in Nigeria.
Also, there is a no long run relationship between all share index as a ratio of
gross domestic product and selected pension fund variables in Nigeria. This
implies that there is a short run relationship between all share index as a
ratio of gross domestic product and selected pension fund variables in Nigeria.
Also, pension fund has positive and statistically insignificant implying that
the present value of pension contributory fund does not impact positively on
its immediate past state. Inflation has positive and significant impact on
market capitalization as a ratio of gross domestic product in Nigeria. Also,
inflation has negative and insignificant impact on all share index as a ratio
of gross domestic product in Nigeria. Pension investment at precious value is
positive and as a statistically significant impact on all share index as a
ratio of gross domestic product in Nigeria implying that pension fund
investment could be used as purchase of share to increase the total share index in the Nigeria for
future benefit for the pensioner whose contribution yields greater
impact or return for stable future. The study recommended that pension fund
administrators in Nigeria should understand that the rate of inflation is
dynamic in Nigeria and the value of money is being lost as money is not worth its values
in the next five years.