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Background of the study
There are various financial markets, which are institutional arrangements that facilitate the intermediation of funds in an economy. The financial market is segmented into two: one is the money market, which deals in short term funds and the other, the capital market that is for long–term dealings in loanable funds (Bakare and Awotundun, 2014; Ekmekcioglu, 2013; Dabwor, 2010; Anyanwu, 1996). The basis of distinction between the money market and the capital market lies in the degree of liquidity of instruments bought and sold in each of the market, which can be further sub-divided into the primary and secondary markets (Jalloh, 2009). While primary market is concerned with the raising of new funds, the secondary market exists for the sale and purchasing of existing securities that are already in people’s hands, thus, enabling savers who purchased securities when they had surplus funds to recover their money when they are in need of cash (Afolabi, 1991). According to Ekmekcioglu (2013), money market provides short term financing for assets that are taking part in short term lending, borrowing, selling and buying whose maturity does not exceed one year.

Money markets play a key role in banks’ liquidity management and the transmission of monetary policy (Eze and Mansi, 2017; Rigg and Zibell, 2009) by providing the appropriate instruments for liquidity trading (Pavtar, 2016), control of money supply and demand-pull inflation, determination of short-run interest rate (Ekmekcioglu, 2013). In normal times, money markets are among the most liquid in the financial sector. Ndugbu, et al. (2016) note that money market instruments are used by intermediary agents especially banks to bridge financial gaps in the economy. By providing the appropriate instruments and partners for liquidity trading, the money market allows the refinancing of short and medium-term positions and facilitates the mitigation of your business’ liquidity risk. The banking system and the money market represent the exclusive setting monetary policy operates in. A developed, active and efficient interbank market enhances the efficiency of central bank’s monetary policy, transmitting its impulses into the economy best (Rigg and Zibell, 2009). Thus, the development of the money market smoothes the progress of financial intermediation and boosts lending to economy (Ochei, and Osabuohien 2012), hence improving the country’s economic and social welfare (Dabwor, 2010). According to Kromtit and Umejiaku (2016), it is salient that the extent to which the money market performs its roles depends largely on its level of development. Therefore, the development of the money market is in all stakeholders’ interests: the banking system itself, the Central Bank and the economy on the whole.

Statement of the problem
The role of the financial market in the development of the real sector and the economy at large cannot be over-emphasized (Kehinde and Adejuwon, 2011). A critical characteristic of the money market is that it should deep and broad so as to absorb large volume of transactions without significant effects on security prices and interest. This characteristic requires that there exist many active market participants such that the transactions of an individual investor will have just infinitesimal effect on security prices and interest rates. The characteristic also requires that there are many varieties of securities so as to ensure that there are always alternative investment instruments available to satisfy the respective return-risk desires of investors in the market. A money market that has depth and breadth will be informationally as well as operationally efficient and will contribute significantly to the growth of the economy.

Iyiegbuniwe (2005) opines that although the Nigerian money market has experience significant growth, both in the breadth of securities as well as the volume of trading since the liberalization of the financial system in 1986, it still needs to be deepened further to achieve the required vibrancy that is expected of a money market. Edo and Ikelegbe (2014) note that the tremendous growth recorded in the Nigerian financial sector especially in terms of the number of banks and other financial institutions due to the liberalization policy initiated in 1986 was associated with weak regulatory system and characterized by a money market with low capital base and operational inefficiency. They reveal that the money market was more active in granting short-term loans/overdrafts as well as trading in foreign exchange, with marginal effects on the real sector of the economy. Also, Ochei and Osabuohien (2012) state that unlike in advanced economies where the money market constitutes the most institution for creating liquidity for government, companies and individuals, the Nigerian money market is inadequate and constrained by the absence of sub-markets and availability of adequate credit instruments required for the smooth operations of the market. This is not to say that the Nigerian money market is ineffective as Oghenekaro (2013) opines that the Nigerian money market continues to evolve and grow; coupled with product innovation and the adoption of new technology etc the stage has been set for the market to become a key player in fostering private sector investment and spurring economic growth and development in the economy. Much have been said and written about the Nigerian capital market but the reversal is the case for the money market in the country. Therefore, there is the need to examine this crucial market and evaluate its performance in terms of its contribution to economic development.

Objectives of the study
The main objective of this study is examine the operations and activities of Nigerian Money Market. The specific objectives of the study are stated below:
1. To evaluate the contribution of the Nigerian money market to the economic growth of the country.
2. To investigate the role of money market in financial development in Nigeria.

Research Questions
The research questions, which would guide this study are as follows:
(i) Is there any significant relationship between money market and economic growth in Nigeria?
(ii) Is there any significant relationship between money market instruments and the development of the Nigerian financial system?

Research Hypotheses
The hypotheses to be tested hence will include the following:
Hypothesis I
H0: There is no significant relationship between money market and economic growth in Nigeria.
Hypothesis II
H0: There is no significant relationship between money market instruments and the development of the Nigerian financial system.

Research Methodology
The analysis that will be made in this study shall be based on time series data for the Nigerian money market and macroeconomic data. Due to the linearity nature of the model formulation, Least Square (LS) estimation method would be employed in obtaining the numerical estimates of the coefficients in the model using Statistical Software for Social Sciences (SPSS).

Two multiple regression models shall be used in the estimation. The model shall seek to investigate the effect of money market instruments on Gross Domestic Product and financial development in Nigeria. This is a follow up on the objectives of study stated earlier. The estimation period shall be restricted to the period between 1981 and 2016 due to non-availability of needed data.

The data for this study would be obtained mainly from secondary sources; particularly from Central Bank of Nigeria (CBN) publications such as the CBN Statistical Bulletin, CBN Annual Reports and Statements of Accounts, CBN Economic and Financial Review Bullion and Bureau of Statistics publications.
Model Specification
Model I
gdp = a0 + a1 Tb + a2 Cd + a3 Cp + a4 Ba + Ui
Where gdp - Real Gross Domestic Product
Tb - Value of Treasury Bills Outstanding
Cd - Value of Certificate of Deposit Outstanding
Cp - Value of Commercial Paper Outstanding
Ba - Value of Banker Acceptance Outstanding
a0, a1, a2, a3, and a4 - Parameters
Ui - Error term

Model II
fdi = b0 + b1 Tb + b2 Cd + b3 Cp + b4 Ba + Ui
Where fdi - Financial Deepening Indicator {Ratio of Money Supply (M2) to Gross Domestic Product – (M2/GDP)(%)}
Tb - Value of Treasury Bills Outstanding
Cd - Value of Certificate of Deposit Outstanding
Cp - Value of Commercial Paper Outstanding
Ba - Value of Banker Acceptance Outstanding
b0, b1, b2, b3, and b4 - Parameters
Ui - Error term

Significance of the study
The study will explore the impact or effectiveness of money market instruments on stabilization of the economy, though the scope of study will be limited to the financial sector. It is hoped that the exploration of his sector will give a broad view of money market instruments on economic stabilization it will serve as an inspiration to other potential students and institutions or individuals as it will contribute to practical life, knowledge advancement and stabilization of Nigerian economy.
Scope of the study

The economy is a large component with lot of diverse and sometimes complex parts; this research work will only look at a particular part of the economy (the financial sector). This work cannot cover all the facets that make up the financial sector, but will look at the money market and its instruments as being used by the government for the stabilization of the economy on its road to industrialization and economic development. In other words, its focus is not on the entire financial, which is a combination of both money and capital markets, but will only delve exclusively on the money market. The empirical analysis and estimation covers the period between 1981 and 2016.

Plan of the Study
This study shall be divided into five chapters. The first chapter provides the background of the subject matter justifying the need for the study. Chapter two presents related literature concerning money market and economic growth. The research methodology, which includes the research design, sources of data, model formulation, estimation techniques etc are stated in chapter three while data presentation and analysis were made in chapter four. Concluding comments in chapter five reflects on the summary, conclusion, recommendations and suggestion for further studies based on the findings of the study.

Afolabi, L. (1991) Monetary Economics. Lagos: Heinemann Educational Books (Nigeria) Plc.
Anyanwu, J. C. (1996) Monetary Economics: Theory, Policy and Institutions. Lagos: Hybrid publishers limited.
Bakare, I.A.O. and Awotundun, A. D. (2014) “Does Financial Structure Development Drive Economic Performance? Theoretical and Empirical Evidence from Nigeria”. European Journal of Business and Social Sciences. Vol. 2, no.11, pp 179-198.
Dabwor, T. D. (2010) “The Nigerian Banking System and the Challenges of Financial Intermediation in the Twenty First Century”. Jos Journal of Economics. Vol. 4, no. 1, pp. 93-108.
Edo, S. and Ikelegbe, A. (2014) “The Nigerian Economy Reforms, Emerging Trends and Prospects”. Centre for Population and Environmental Development (CPED) Monograph Series. No 8, pp 1-94.
Ekmekcioglu, E. (2013) “Role of Financial Markets in a Global Economy and the Concept of Uncertainty”. International Journal of Academic Research in Economics and Management Sciences. Vol. 2, no. 4, pp. 199-206.
Eze, G. P. and Mansi N. (2017) “Money market and economic growth in Nigeria: A causality analysis”. Online Journal of Arts, Management and Social Sciences (OJAMSS). Vol. 2, no. 1, pp.140-163.
Iyiegbuniwe, W. I. C. (2005) Nigerian Money Market: Evolution and Structure. In: Fakiyesi O. O. and Akano S. O. (eds.) Issues in Money, Finance and Economic Management in Nigeria. Lagos: University of Lagos Press.
Kehinde, J. S. and Adejuwon, K. D. (2011) “Financial Institutions as Catalyst to Economic Development: The Nigerian Experience”. European Journal of Humanities and Social Sciences. Vol. 8, no.1 (Special Issue), pp. 322-334.
Kromtit, M. J. and Umejiaku, R. I. (2016) “Implications of Money Market Deepening for Financial Inclusion in Nigeria”. Journal of Business and Economics. Vol. 7, no. 3, pp. 525-532.
Ndugbu, M. O., Duruechi, A. H. and Ojiegbe, J. N. (2016) “Money Market Instruments and Bank Performance in Nigeria.” Journal of Economics and Sustainable Development. Vol. 7, no. 10, pp. 95-104.
Ochei, A. I. and Osabuohien, E. (2012) “Discount Houses, Money Market and Economic Growth in Nigeria (1992-2007)”. Economic Insights – Trends and Challenges. Vol. I (LXIV), no. 3/2012, pp. 19-30.
Oghenekaro, O. A. (2013) “The Nigerian Money Market”. Central Bank of Nigeria’s Understanding Monetary Policy Series. No 27, March, pp. 1-15.
Pavtar, A. (2016) “The Nexus between Money Market Instruments and Nigeria’s Economic Growth: A Time Series Analysis”. Journal of Accounting and Financial Management. Vol. 2, no. 3, pp. 22-39.
Rigg, R. and Zibell, L. S. (2009) “The Financial Crisis and Money Markets in Emerging Asia”. Asian Development Bank (ADB) Working Paper Series on Regional Economic Integration. No. 38, November, pp. 1-48.

Project Status
Project File Format
MS Word
Number of Chapters
Number of Pages
Number of Words
Number of References
Project Level
N15,000 - Fifteen Thousand Naira (Non-Negotiable)
Abstract, Regression Data and Results are included
How to Pay for this Project . . . .CLICK HERE

Keywords: money, money markets, short term money market, money market funds, money market investment, money market instruments, money market securities, world money market, role of commercial banks, role of financial institution in economic development, role of central bank in economic development, nigerian money market





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