GOVERNMENT BOND AND CAPITAL MARKET GROWTH IN NIGERIA

The capital market serves several purposes in an economy of a state; it promotes the freeflow of medium and long term equity and debt capital to corporations and governments that use it to execute the projects that increases the growth of the economy, it is very important that a capital market is efficient in its structure and operations so as to allure investors. This is tied to the realization of capital markets on government bonds policies. This study empirically investigates nexus between government bond and capital market in Nigeria over the period 1999-2021. Stock returns, the dependent variable is regressed on four explanatory variables, government bond price, government bond rate, the liquidity of the bond market and real GDP. The Ordinary Least Squares (OLS) econometric technique was utilized for the estimation. The empirical findings show that government bond price and government bond rate are negatively and significantly related to stock returns. The liquidity of the bond market is positively related to stock returns but not significant. Further evidence show that real GDP has a positive and significant impact on stock returns.. Against the backdrop of the foregoing findings, improved and innovative measures to develop the capital market, particularly the development of new and diversified securities should be created in the capital market. Strengthening the legal and institutional framework to guard, regulate and to enhance the general operations of the capital market is also imperative.