Sovereign Bond and Stock Market Returns in a Rising Economy

Abstract

Purpose: The aim of this study is to examine the impact of government bonds on Nigeria’s stock market performance. Theoretical framework: This work adopted the model of Khan and Zaman (2012) which used multiple regression method to investigate the link between macroeconomic factors and stock values in Pakistan's Karachi Stock Exchange. Design/methodology/approach: The research period runs from 2005 to 2022, and uses the secondary form of data and the ordinary least squares approach. Other analytical examinations include normalcy, stability, interconnectivity, and autocorrelation testing. Findings: The results show that the Federal Government's unique bond does not considerably and favorably impact stock market performance. The stock outcome also demonstrates that interest rates are extremely unfavorable to stock market returns. Research, Practical & Social implications: The study concludes that the government can apply other techniques to diversify bonds sold in the stock market. It is imperative that the appropriate authorities manage interest rates and other economic elements that impact stock market performance. Originality/value: The study is valuable since it is one of the first to assess the influence of government bonds in boosting stock market performance in an emerging nation. Although the outcome of the study calls for government action to ensure that state bonds are fascinating to investors, it should also endeavour to improve the sustainability of the country's stock market.