EFFECT OF MONEY MARKET INSTRUMENTS ON LIQUIDITY OF DEPOSIT MONEY BANKS IN NIGERIA
Abstract
This study aims to examine the effect of money market instruments on the liquidity of deposit money banks in Nigeria. Time series data was obtained from the statistical bulletins from Central Bank of Nigeria covering the period of nineteen (19) years i.e., 2002 to 2022. The study employed descriptive statistics and OLS regression analysis for the inferential statistics. The findings revealed that all the variables (liquidity ratio, treasury bills, commercial papers, banker's acceptance, and federal government bond) had positive and significant effect on the liquidity of Deposit Money Banks (DMBs). The implication of these findings is that deposit money bank explores the investment opportunities in the money market and in turn improve the liquidity position of DMBs. Moreover, the study concluded that policies that will develop and strengthen Nigerian money market should be formulated and implemented by regulatory authorities through the reform of the central bank discount window
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