IMPACT OF GOVERNMENT BONDS ON CAPITAL MARKET PERFORMANCE IN NIGERIA

ABSTRACT

Nigeria capital market is relatively new and has many factors influencing it. The capital market is for sourcing of long term loans, while the floating of government bonds will likely stimulate the capital market in its size and activities. Thus, the study investigated the effect of government bonds on capital market performance in Nigeria within the period of (1990 – 2016). The method of analysis used in testing the hypothesis was the Ordinary Least Square (OLS) technique. The study among other things reported that, Federal government of Nigeria bonds has a significant impact on capital market performance in Nigeria, Federal government value of trade bonds has a significant impact on capital market performance in Nigeria and Federal government total new issue has a significant impact on capital market performance in Nigeria. Based on the findings, the study recommended that: The government should continue to acquire funds majorly through FGN bonds. As shown in the result, FGN bonds have a significant positive impact on capital market performance in Nigeria. To continue boosting the value of trade in the Nigerian capital market, there is need for availability of more investment instruments such as derivatives, convertibles, future and swaps options in the market. Total new issues are very important to the growth of any capital market. Therefore, government should continue to employ appropriate trade policies such as establishing National Association of Securities Dealers (NASD) that promote the inflow of international capital and foreign investment, so as to enhance the production capacity of the nation. 

TABLE OF CONTENTS

Cover page ﾿ i

Title page ﾿ ii

Declaration ﾿ iii

Certification ﾿ iv

Dedication ﾿ v

Acknowledgement ﾿ vi

Table of Contents ﾿ vii

List of Tables ﾿ ix

Abstract ﾿ x

CHAPTER ONE: INTRODUCTION ﾿ 1 ﾿

1.1 Background of the study ﾿ 1

1.2 Statement of Problem ﾿ 2

1.3 Objectives of the study ﾿ 3

1.4 ﾿ Research Questions ﾿ 3

1.5 Research Hypotheses ﾿ 3

1.6 Scope and limitation of the study ﾿ 4

1.7 Significance of the study ﾿ 4 ﾿

1.8 Definition of terms                                                                                                           5

CHAPTER TWO: REVIEW OF RELATED LITERATURE ﾿ 6

2.1 Conceptual Framework ﾿ 6

2.1.1 The concept of capital market  ﾿ 6

2.1.2 Roles of the Nigerian capital market ﾿ 7

2.1.3 Capital market and economic growth channels of linkage ﾿ 8

2.1.4 Definition of Bonds and the Bonds Market ﾿ 10

2.1.5 Overview of the Nigerian Bonds Market  ﾿ 12

2.2 Theoretical Framework ﾿ 12

2.2.1 The Nigerian stock market in perspective ﾿ 14

2.2.2 Nigerian stock exchange specific reforms ﾿ 17

2.3 ﾿ Empirical Literature Review ﾿ 19

CHAPTER THREE: RESEARCH METHODOLOGY ﾿ 25

3.1 ﾿ Research design ﾿ 25

3.2 Area of Study ﾿ 25

3.3Sources of data collection ﾿ 25

3.4 ﾿ Description of Variables ﾿ 25

3.5 Model Specification ﾿ 26

3.6 Techniques of Analysis ﾿ 27

3.6.1 T- Statistics ﾿ 27

3.6.2 F- Statistics ﾿ 27

3.6.3 R- Squared ﾿ 28

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND DISCUSSION ﾿ 29

OF FINDINGS

4.1 Introduction: ﾿ 29

4.2 Descriptive analysis  ﾿ 30 ﾿    

4.3 Analysis, Discussion of Findings and Hypotheses Testing ﾿ 31 

4.3.1 Test of Hypothesis ﾿ 32

4.4 Discussion of Result ﾿ 34

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Introduction ﾿ 35

5.2: Summary of Findings ﾿ 35

5.3 Conclusion ﾿ 36

5.4 Recommendations ﾿ 36

References ﾿ 37

Appendix 

LIST OF TABLES

Table1: Data Presentation ﾿ 29

Table 2: Descriptive Statistics ﾿ 30

Table 3: Presentation of Ordinary Least Square Regression (OLS) Result. ﾿ 31