THE ROLE OF MONEY MARKET IN THE NIGERIAN ECONOMY. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
BACKGROUND OF THE STUDY
The first batch of treasury bills issued by the central bank of Nigeria (CBN) in April 1960. Saw the birth of money market in Nigeria.
The market has experienced a remarkable increase in size. Since that date with the addition of a number of traditional short term money market entrustments. In circulation today are eight of such instrument as contained in the subsequent chapter.
Money market can be defined as the place of mechanism whereby funds are obtained. For short periods of time (from one to one year) and financial assets representing short term claim are exchanged.
As a section of the financial market, it is made up of financial organization and dealers. They as a group quicken the borrowing and lending of short-term money (bank credit and non bank credit) by bringing under one umbrella those institutions with surplus funds, which wish to lend on a short-term basis and those wishing to borrow.
In this country, money market is composed of the central bank of Nigeria (CBN) commercial banks, merchants bank, federal savings bank, insurance companies, the federal government and statutory corporations.
Accounting for over 50% of average total holdings of its instruments. Commercial banks dominated it in 1984.
It is important to note that although the money market is so crucial to the workings of the Nigeria economy. Is not geographically centered, as in the case with stock exchange.
Even in a developed country like America for instance, one cannot find in the same physical sense can find the flea market and farmers market Paris and loss ageless respectively.
However, this does not mean that money market activities cannot be carried out at a specified area or street in a more developed country a typical example is London.
In London, borrowers and lenders of short-term money meet at Wall Street in London. They also trade on short-term debt securities. Infact, money market is a loose network of dealers, bankers and treasures of public and private corporations talking in very large round numbers over telephone and personal contacts.
OBJECTIVES OF THE STUDY
Since there is no doubt that money market serve as one of the major basis for assessing the economic health of a country.
Moreover, that the activities are influenced by the position of the countries foreign reserve, balance of payment and the state of the economy in general it is now necessary to do the following:
1. See the results of money market on the rural and urban business transactions.
2. To evaluate the scope of money market.
3. Understand the conditions under which money market can operate effectively.