Abstract:
Development of domestic bond market deserves high priority for a country to enter a sustained phase of development. Most developed countries have well-developed bond markets, with some emerging economics making significant progress in this regard. In Nigeria however, the bond market sector needs further development. The purpose of this study was to examine the performance of this segment and compare it to equity sector so as to determine how the bond market measured. Variables such as actual investments in term s of issues and subscriptions rate in the primary market, the turnover ratio in the secondary market, the yields (returns) on the securities and the degree of heterogeneity of investors were used in the investigation. Ex-pos t-facto research design was used for the study, guided by four research questions and four hypotheses. The study population used was the total value of investments in all bond and equity securities, their turnover ratio s and average yields (1961 - 2008). Time series data covering the period of 1980 - 2008 were used as the sample size. Tables, percentages, arithmetic means, Mann- Whitney test and the Students Hest were employed to verify the hypotheses all of which were tested at 0.05 level of significance. For purpose of accuracy in results, a software package, the Statistical Package for Social Sciences was employed for calculations. The major findings of the study were that investments and turn over ratios in bond market were as effective as that of equity market. The coupon yields were more attractive than dividend yields. The institutional investors were found to be dominant in the market. Though the market measured well with the equity counterpart, the sector still lags behind in several indicators of bond market development. The study recommended among other things that governments' efforts should concentrate on building and developing the government bond market and let the corporate bond market follow in its footsteps. Meanwhile, as a matter of utmost importance, the Federal Government should, strictly, be committed in improving the country's macro-economic environment by keeping inflation low, maintaining a stable exchange rate regime and enhancing financial infrastructures.
