Tag Archives: Money Market

Effect of Money Market Instruments on Capital Market Performance in Nigeria (Published)

The study examined the effect of money market instruments on capital market performance in Nigeria   using time series spanned data over a period, 1981-2018. Secondary data were sourced from the central bank of Nigeria statistical bulletin 2018. Descriptive statistics, covariance Analysis, Johansen cointegration and vector error correction model were used in the study, the study is to determine how the trading of commercial paper, Bankers’ acceptance and Treasury Bills affects capital market performance in Nigeria for the period under review. The result of the study indicates that treasury bills (TB) is negative at lags 1 and 2;  the implication is that an increase  in purchase of treasury bills in the money market would result to a fall in the annual market capitalization of the Nigerian capital market. Similarly, a negative relationship was also noticed between commercial paper (CP) trading and annual market capitalization  which implies that  an increase in trading on commercial paper will lead to a decrese in the trading of  annual capital market. However, a positive relationship was observed between bankers’ acceptance (BA) and annual market capitalization . Following the above results, the following recommendations are made. There should be adequate market information to investor in stocks to enable them transform their stock from money market to capital market depending on the market outlook. Both market (money and capital market) should ensure that they work harmoniously because investors holding one stock can cause adverse negative effect on the other.

Keywords: Capital market, Money Market, bankers’ acceptance., treasury bill

Does Money Market Spur Economic Growth in Nigeria? Granger Causality Approach (Published)

This study examined the relationship between money market and economic growth in Nigeria. The study adopted money market instruments such as treasury bills (TBs), commercial papers (CPs) and bankers’ acceptances (BAs) as proxy for money market (independent variables), and gross domestic product (GDP) as proxy for economic growth (the dependent variable). Secondary time series data for the variables were collected from CBN Statistical Bulletin and the National Bureau of Statistics for the period 1989-2014. The study employed econometric techniques such as ADF, Unit Root Test, OLS, multiple regression and Granger Causality Test to analysed the study data; and found strong evidence that TBs, and CPs had positive and significant influence on GDP, while BAs had positive but insignificant influence on GDP in Nigeria. The granger causality test result revealed no directional causality relationship between TBs and GDP, meaning that TBs does not granger cause GDP and vice-versa. There was also no directional causality relationship between CPs and GDP, BAs and GDP. However, there exists bi-directional relationship running from CPs to TBs and BAs as it was established at 5 per cent level of significance. The study recommended among others that for the money market to influence meaningful economic growth and development in Nigeria, appropriate policies should be employed to strengthen and deepen the market.

Keywords: Bankers’ Acceptances, Commercial Papers, Gross Domestic Product, Money Market, Treasury Bills, economic growth

Does Money Market Spur Economic Growth In Nigeria? Granger Causality Approach (Published)

This study examined the relationship between money market and economic growth in Nigeria. The study adopted money market instruments such as treasury bills (TBs), commercial papers (CPs) and bankers’ acceptances (BAs) as proxy for money market (independent variables), and gross domestic product (GDP) as proxy for economic growth (the dependent variable). Secondary time series data for the variables were collected from CBN Statistical Bulletin and the National Bureau of Statistics for the period 1989-2014. The study employed econometric techniques such as ADF, Unit Root Test, OLS, multiple regression and Granger Causality Test to analysed the study data; and found strong evidence that TBs, and CPs had positive and significant influence on GDP, while BAs had positive but insignificant influence on GDP in Nigeria. The granger causality test result revealed no directional causality relationship between TBs and GDP, meaning that TBs does not granger cause GDP and vice-versa. There was also no directional causality relationship between CPs and GDP, BAs and GDP. However, there exists bi-directional relationship running from CPs to TBs and BAs as it was established at 5 per cent level of significance. The study recommended among others that for the money market to influence meaningful economic growth and development in Nigeria, appropriate policies should be employed to strengthen and deepen the market.

Keywords: Bankers’ Acceptances, Commercial Papers, Gross Domestic Product, Money Market, Treasury Bills, economic growth