EFFECT OF PENSION FUNDS INVESTMENTS AND CHANGES IN CRUDE OIL PRICE ON ECONOMIC GROWTH IN NIGERIA
EFFECT OF PENSION FUNDS INVESTMENTS AND CHANGES IN CRUDE OIL PRICE ON ECONOMIC GROWTH IN NIGERIA
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Date
2021
Authors
JUMARE, Bashir
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Abstract
Economic growth represents the expansion of a country‟s potential gross domestic product (GDP)
or output. For instance, if the social rate of return on investment exceeds the private return, then
tax policies that encourage the excess can raise the growth rate and levels of utility. Growth
models that incorporate public services, the optimal tax policy lingers on the characteristic of
services. The broad objective of this study is to examine the effects of contributory pension funds
investments and changes in crude oil price on economic growth of Nigeria for the period 2010 to
2018. In achieving this objective, the study employed Ex-post facto research designs and also
study utilized data from secondary sources. The study used time series econometric techniques
with quarterly data spanning from q1-2010 to q4-2018 to explore the effects of contributory
pension funds investments and changes in crude oil prices on economic growth in Nigeria which
were subjected to statistical analysis using Equilibrium Correction Model (ECM) and
Autoregressive Distributive Lag (ARDL) bound test approach to co-integration to determine the
short-run and long-run dynamic relationship between the variables. To check the time series
property of the variables, stationarity properties of the data and the order of integration are tested
using the Augmented Dickey-Fuller (ADF) unit root test, Phillip-Perron (PP) test and
Kwiatkwoski-Phillips-Schmidt-Shin (KPSS) test. All the variables are found to be cointegrated
indicating the existence of long run relationship among the variables. The findings of the study
clearly showed that the coefficient of total assets of pension funds was found to be positive and
statistically significant on economic growth. Similarly, the coefficient of total pension funds
contribution was found to be positive and statistically significant on economic growth and the
coefficient of crude oil price was negative but statistically significant on economic growth. Base
on the findings, the study recommended that Pension fund assets should be invested productively
in diversified investment portfolios so as to generate increased returns and at same time minimize
risks to both pension funds administrators and the contributors to the funds in Nigeria. Also,
Nigerian government should ensure diversification of its export revenue base as a means of
minimizing reliance on crude oil and petroleum products. This will further shield the economy
from the impact of oil price shocks on the economy, and thus prevent the negative effects of the
shocks from attaining a statistical significance level.
Description
BEING A DISSERTATION SUBMITTED TO THE SCHOOL OF POSTGRADUATE
STUDIES, AHMADU BELLO UNIVERSITY, IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE AWARD OF MASTER OF PHILOSOPHY (MPHIL) IN
BUSINESS ADMINISTRATION DEPARTMENT OF BUSINESS MANAGEMENT,
ABU BUSINESS SCHOOL,
AHMADU BELLO UNIVERSITY,
ZARIA, NIGERIA