Abstract: This study investigated the Effect of Contributory Pension Scheme on Capital Market in Nigeria. The time series data used in this study were for a period of seven years (2006 - 2012). To capture the objective of the study, the researcher employed Pairwise Correlation model to determine the significance of the relationship between the Pension Asset Under Management (AUM) and Market Capitalization (MC), and Local Ordinary Share (LOS) of the Contributory Pension Scheme and Market Capitalization (MC) in Nigeria. The Coefficient of Determination (r2) was used to determine the actual effect of Pension Asset Under Management (AUM) on Market Capitalization (MC). It was also used to determine the effect of Local Ordinary Share (LOS) of the Contributory Pension Scheme on Market Capitalization in Nigeria. The econometric results indicated that AUM had no significant effect on MC in Nigeria. The econometric result also evidenced that LOS of the Contributory Pension Scheme had no significant effect on MC as majority of the pension fund asset is held by Federal Government as bond. The insignificance effect of AUM on MC could also be as a result of economic meltdown that strikes the Nigeria economy between the periods of 2008 to 2010. From the result of the analysis, the researcher discovered that Contributory Pension Scheme had no significant impacted on Capital Market in Nigeria. It was established that the pool of funds accumulated by the national Contributory Pension Scheme were invested and spread among different assets, but it had no significant effect on the growth of the Nigeria Capital Market during the period under review. The researcher, therefore, recommended that National Pension Commission should ensure that there is effective liberalization of the pension fund investment to encourage more investment in the Nigerian Capital Market since there is a positive relationship between Contributory Pension Scheme and Capital Market in Nigeria.
Keywords: Contributory Pension Scheme, Capital Market, Asset Under Management, Market Capitalization and Local Ordinary Share.
Title: Effects of Contributory Pension Scheme on Capital Market in Nigeria
Author: Madukwe, Obinna Darlington
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
Research Publish Journals
