ROLE OF NIGERIAN MONEY MARKET IN THE NATIONAL DEVELOPMENT
Money market, like most financial market involved in the intermediation of fund is the hub of any economy.
It is a common knowledge that operators often are strict for trading of money market products/service, problems often arise on the operations a grapple with such question on the following:
- Whether the supervisory role of the regulators has any impact on the money market operation?
- Whether the operators operations affect the money market operation?
- Whether there is a hindrance in money market operation?
- To offer suggestion on how to improve the money market operation.
This project is vital in answering this question in relation to money market
TABLE OF CONTENT
Table of content———————————–vi
- Introduction————————————— 1
1.1 Background of the study————————– 2
1.2 Statement of the problem ———————-4
1.3 Objective of the study————————— -5
1.4 Research questions——————————- -6
1.5 Significance of the study ———————– -7
1.6 Scope of the study ———————————8
1.7 Limitation of the study————————– –9
1.8 Definition of terms—————————— –9
- Review of related literature ———————–12
- Money market in the Nigerian financial system–12
- Reasons for money market establishment——-14
- Features of money market————————-16
- Operators in money market———————–17
- Regulators of money market———————-19
- Instrument of control—————————— 22
- Instruments of money market———————29
- Money market in the National Development——32
- Hindrances in money market operation———- 34
- Summary—————————————– 37
- Research design and methodology ————-39
- Introduction ———————————39
- Research design —————————–39
- Sources /method of data collection ——-40
- Population and sample size—————–41
- Sample techniques———————–41
- Validity and reliability
of measuring instruments —————46
- Method of data analysis. —————–42
- Presentation and analysis of data—————43
- Presentation of data————————44
- Analysis of data——————————45
- Interpretation of results.———————53
5.0 Summary, Conclusion and Recommendation.—54
5.2 Conclusion—————————————- 55
The money market in our economy in a very vital sector and its position in the economy cannot be over emphasized. The money market in Nigeria was fashioned along with that of Britain, established and nurtured by the CBN primarily for mobilizing domestic savings for productive investment as well as providing the government with funds to enable it implement its economic programme.
Money market as an intermediary for short term financial assets that are close substitute for money consists of the CBN, Deposit money bank, Discount house, corporate bodies, individuals, finance companies Bureau de change as its major operators and deals on various financial instrument such as bills, certificates, commercial papers, certificate of deposit etc which one transferable and desirable in nature.
Notwithstanding, the recent global economic meltdown which tends to set a disjunction between the surplus and the deficit sectors, the surplus sector appears not to be interested in lending to the deficit sector, this pose a serious bottleneck to the proper functioning of the money market, thereby reducing the level of investment in the economy. The logic question now is what would be the lot of Nigerian economic and its inhabitants in general.
1.1 BACKGROUND OF THE STUDY
These are various financial markets which are institutional arrangements that facilitates the intermediation of funds in an economy. They financial market is segmented into two- of is money market, which deals in short term funds and the other capital market that is for long term dealing in funds ( Anyanwu 1996). The basis of distinction between the money markets 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 primary and secondary markets, while primary market is concerned with the raising of new funds, the secondary market exist for the sale and purchasing of existing centuries that are already in people’s hands thus, enabling savers who purchase securities when they have surplus funds to recover their money when they are in need of cash to (Afolaki 1991).
Money market play a key role in banks liquidity management and transmission of monetary policy. In normal times, money markets are among the most liquid in the financial sector. By providing the appropriate instruments and partners for liquidity trading the money market allows the refinancing of short-term and medium term positions and facilitates the mitigations of your business liquidity risk. The banking system and the money market represent the exclusive setting monetary policy operates in a developed active an efficient inte banks market enhances the efficient of central banks monetary policy, transmitting its impulses into the economy best thus the development of the money market smoothes the progress of financial intermediation and boosts lending to the economy , hence improving the country’s economic and social welfare.
Therefore, the development of the money market is in all stakeholders interest the banking system itself the central banks and the economy on the whole.
1.2 STATEMENT OF THE PROBLEM
The role of the financial market in the development of the real sector and the economy at already cannot be overemphasized.
A critical characteristics of the money market is that it should deep and broad so as to absorb large volume of transactions without significant effect on security prices and interest this characteristics requires that these exist many active market participatant such that the transaction of an individual investors will have just infinitesimal effect on security prices are interest rates the characteristics also requires that there are always alternative investment instrument available to satisfy the respective return risk desires of investors in markets.
A money market that has depth and breath will be informationally as well as operationally efficient and will contribute significantly to the growth of the economy therefore these is need to examine this crucial market and evaluate. Its performance in terms of its contribution to economic development.