The Effects Of Pension Reform On The Nigerian Capital Market (2004-2014)

ABSTRACT 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 CONTENTSCHAPTER ONE: INTRODUCTION51.1Background of the Study51.2Statement of the Problem91.3 Objectives of the Study121.4Research Hypothesis131.5 Significance of the Study131.6Methodology of the Study141.7Limitations of the Study151.8Organisation of the Study15
CHAPTER TWO: LITERATURE REVIEW162.1Concept of Pension Reform and Economic Growth162.1.2Objectives of Pension Reforms182.2An Overview on Pension and Pension Reforms: Theoretical Framework192.2.1Types of Pension Reforms212.2.2An Overview of the Nigerian Capital Market232.3The Pension- Capital Market Relation: Specific Channels of Linkage and Empirical Literature262.3.1Specific Channels Through which Pension Reforms Affect  Capital Market272.3.2Empirical Literature on the Pension-Capital Market Nexus282.3.3Nigerian-Specific Empirical Evidence312.4     Pension Reforms in Nigeria332.4.1Pension Administration in Nigeria Prior to the 2004 Reform342.4.2The Pension Reform of 2004372.4.3An Appraisal of the Achievements of the 2004 Pension Reform Objectives in Nigeria: Successes and Challenges41

CHAPTER THREE: RESEARCH METHODOLOGY AND MODEL SPECIFICATION443.1Introduction443.2Theoretical Framework443.3Analytical Framework: Model Formulation463.4        Method of Data Analysis473.5        Data Sources48
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF RESULTS494.1        Introduction494.2        Empirical Results and Analysis494.2.1     Augmented Dickey Fuller Unit Root Test494.2.2Ordinary Least Squares (OLS) Estimation Results504.2.3Error Correction Model534.3Evaluation Of Working Hypotheses564.4       Discussion of Findings And Policy Implications57
CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDSTIONS AND CONCLUSION595.1Summary of Findings595.2Policy Recommendations595.3Conclusion61Bibliography62Appendix I: Data for Regression67Appendix II: Regression Results78