Impact Of The Money Market In The Growth Of Nigeria Economy : Current School News

Impact Of The Money Market In The Growth Of Nigeria Economy

Filed in Current Projects, Economics Project Topic by on October 19, 2020

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Impact Of The Money Market In The Growth Of Nigeria Economy


The study examines the impact of money market on economic growth in Nigeria using data for the period 1981-2013. Econometrics technique, Ordinary Least Squares Method was used to evaluate the relationship.

In the model specified Gross Domestic Product is used as the constant (Dependent variable) while money market interest rate, ratio of loan to deposit, commercial bank deposit, credit to private sector are the independent variable.

The study suggest that though a  relationship exists between money market and economic growth, but the present state of the Nigerian money market is significantly and negatively related to economic growth.

The connection between the money market and the real sector of the economy is very weak.

This implies that the market has not grown to produce the needed growth that will push the Nigerian economy because of several challenges.

It was therefore recommended that government should make the appropriate macroeconomic policies, legal framework and sustain the present reforms with a view to developing the market so as to promote productive activities, investments, and finally economic growth.


The money market is a market for short term funds and as the name suggest. It is a market in which money is bought and sold.

The market is used by business enterprise to raise fund for the purchase of inventories by banks to finance temporary reserve loss by companies to finance consumer credit and by government to bridge gap between its recipient and expenditure.

Unlike the market for textiles, for example there is no place that one can call a money market. Although  activities in the money market can be concentrated in a particular street for example all street of new York,

Lombard street in London and broad street in Lagos. Transactions are impersonal taking place mostly by telephone Ajayi and Ojo (1981).


Agha, A.I., Ahmed, N. Mubarak, Y. A. & Shah. H (2005). Transmission Mechanism of Monetary Policy in Pakistan SBP Research Bulletin.

Ehiagiamusoe,U.K (2013) “The link Between Money Market and Economic Growth in Nigeria: Vector Error Correction Model Approach. International Journal of ,Social ,Management and Business Engineering, Vol:7 no12.

Erb, R.D. (1991). Economic Growth and Development; The Roles of a Financial Sector Newman Press, New Delhi.

Gelbard, E. & Leite, P.S. (1999). Measuring Financial Development in Sub-Sahara Africa. IMF Working Paper.

Goldsmith, R.W. (1969). Financial Structure and Development New Heaven, Conn Yale University Press.

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