BOND MARKET PERFORMANCE AND EDUCATION SECTOR GROWTH IN NIGERIA: A CAUSAL INFERENCE

Abstract

The bond market as a financial market has been regarded as a source of debt capital for the economy and for any meaningful growth in any sector to be recorded, capital is important. Therefore, this study investigated the causality between bond market performance and education sector growth in Nigeria during the period, 1981-2023. In the study, bond market performance, education sector growth, and government expenditure were measured as bond market capitalization, education sector’s value-added to gross domestic product, and government recurrent expenditure on education, respectively. The annual time series data employed in the study were obtained from Central Bank of Nigeria’s Statistical Bulletin and the analysis was conducted using pairwise Granger causality test to determine the direction of causality between the variables of study. The study found that bond market performance and education sector growth have bi-directional causal relationship in Nigeria, which implies the existence of feedback effect between bond market and education sector growth. It can therefore be concluded that bond market performance and education sector growth reinforce each other in Nigeria. To facilitate education sector growth, the instrument of bond market should be considered and applied, and vice versa, to enhance bond market performance, the role of the education sector is key.