IMPACT OF MONEY MARKET ON THE LIQUIDITY OF SOME SELECTED QUOTED BANKS IN NIGERIA.doc

IMPACT OF MONEY MARKET ON THE LIQUIDITY OF SOME SELECTED QUOTED BANKS IN NIGERIA.doc

This preview shows 1 out of 3 pages.

IMPACT OF MONEY MARKET ON THE LIQUIDITY OF SOME SELECTED QUOTED BANKS IN NIGERIA Isibor, Areghan Akhanolu Lecturer, Department Of Banking and Finance, Covenant University, Ota, Ogun State, Nigeria Email: [email protected] Ikpefan, O. A. Ph.D, ACA, ACIB, FNIM Associate Professor, Department Of Banking and Finance, Covenant University, Ota, Ogun State, Nigeria Email:[email protected] Okafor, Tochukwu Chibuzor Lecturer, Department Of Banking and Finance, Covenant University, Ota, Ogun State, Nigeria Email: [email protected] ABSTRACT Finance is a major key element in fostering growth and development of a company and financial managers look mainly to the money and capital market for various term funds. The Nigerian money market has lagged behind in performing its intermediation role in providing such needed funds to the companies thus limiting their operations. Against this background, this paper examines the impact of the Nigerian money market instruments on the liquidity of ten selected quoted banks from 2005 to 2014. Secondary data were used and the multiple regression econometric technique was used to analyze the data. The study found that firms’ working capital and profitability have a significant impact on the money market instrument. Since the money market is very vital for financial managers to raise short-term funds, amongst others the study recommends that to improve the money market there should be adequate monitoring and surveillance of the activities of the market participants and also the introduction of new and flexible financial instruments. Keywords: Money market, Working capital, multiple regression, money market Instruments 1
Image of page 1

Subscribe to view the full document.

1.1 INTRODUCTION According to Nwankwo (1991), when all other factors of production (land, labour, and entrepreneur) are held constant, the most important factor that can facilitate economic activities, investment initiatives, economic growth and development is finance. Finance is an important factor in any organization and many use the Nigerian Money Market as an avenue to get short term funds. The money market is a collection of financial institutions set up for the granting of short-term loans and dealing in short-term instruments that are readily convertible into cash, and whose maturity ranges between a few days to one year. The market provides ample opportunities for investors and corporate financial managers with surplus funds to lend at short term, thereby meeting the demands of borrowers who are in need of temporary finance for liquidity and can offer an acceptable claim to money (Omelomo, 2001). The importance of the money market to the growth and development of the Nigerian economy in general cannot be over-emphasized. This is because the market acts as intermediation to channel funds from the surplus side to the deficit side of the Nigerian population for short term investments mainly in trade and commerce. Thus, the development of the money market smoothens the progress of financial intermediation and boosts lending to economy (Ikpefan and Osabuohien, 2012).Money markets play a
Image of page 2
Image of page 3
You've reached the end of this preview.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern