This work provides empirical evidence on the effect pension reforms have on the Nigerian capital market. Using data spanning 2004-2014 and a five variable model, market capitalization was regressed on total pension assets, number of workers registered on pension scheme, GDP per capita, and turnover ratio. Total pension assets and number of workers registered on pension scheme were employed as proxies for pension reform. Results from the Ordinary Least Square (OLS) estimation as well as the estimation of the Error Correction Model (ECM) show that growing total pension assets and number of workers registered on pension scheme (as a result of pension reforms) both have positive impact on stock market performance and development. However, these positive impacts were found to be insignificant. The relatively young nature of the reforms, poor implementation, and low compliance from Nigerian workers are reasons that most probably explains the insignificance of the positive effect of the pension reform on capital market development in Nigeria. Thus, it was recommended that the regulatory capacity and technical competence of PENCOM as the apex regulatory body of the Nigerian pension sector should be enhanced, compliance rates should be improved as well as providing a good range of investible assets on the Nigerian stock market to promote investment of pension assets on the capital market.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION5
1.1Background of the Study5
1.2Statement of the Problem9
1.3 Objectives of the Study12
1.4Research Hypothesis13
1.5 Significance of the Study13
1.6Methodology of the Study14
1.7Limitations of the Study15
1.8Organisation of the Study15
CHAPTER TWO: LITERATURE REVIEW16
2.1Concept of Pension Reform and Economic Growth16
2.1.2Objectives of Pension Reforms18
2.2An Overview on Pension and Pension Reforms: Theoretical Framework19
2.2.1Types of Pension Reforms21
2.2.2An Overview of the Nigerian Capital Market23
2.3The Pension- Capital Market Relation: Specific Channels of Linkage and Empirical Literature26
2.3.1Specific Channels Through which Pension Reforms Affect Capital Market27
2.3.2Empirical Literature on the Pension-Capital Market Nexus28
2.3.3Nigerian-Specific Empirical Evidence31
2.4 Pension Reforms in Nigeria33
2.4.1Pension Administration in Nigeria Prior to the 2004 Reform34
2.4.2The Pension Reform of 200437
2.4.3An Appraisal of the Achievements of the 2004 Pension Reform Objectives in Nigeria: Successes and Challenges41
CHAPTER THREE: RESEARCH METHODOLOGY AND MODEL SPECIFICATION44
3.1Introduction44
3.2Theoretical Framework44
3.3Analytical Framework: Model Formulation46
3.4 Method of Data Analysis47
3.5 Data Sources48
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULTS49
4.1 Introduction49
4.2 Empirical Results and Analysis49
4.2.1 Augmented Dickey Fuller Unit Root Test49
4.2.2Ordinary Least Squares (OLS) Estimation Results50
4.2.3Error Correction Model53
4.3Evaluation Of Working Hypotheses56
4.4 Discussion of Findings And Policy Implications57
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDSTIONS AND
CONCLUSION59
5.1Summary of Findings59
5.2Policy Recommendations59
5.3Conclusion61
Bibliography62
Appendix I: Data for Regression67
Appendix II: Regression Results78