Money market and economic growth in Nigeria

Abstract

This study investigated the relationship between money market operations and economic growth in Nigeria from 1985 to 2020, utilising variables such as Treasury Bills, Commercial Papers, Certificates of Deposit, and Bankers' Acceptance against a single
measure of growth, which was denoted by the nation's Gross Domestic Product during the study period. The study employed the unit root, Johansen co-integration, VECM and Granger Causality techniques. According to the study, Treasury Bills, Certificates of
Deposit, and Bankers' Acceptance are important factors of what happens in the money market and are critical in determining Nigeria's economic growth. The favourable but minor long-run connection of commercial papers reflects the relatively tiny fraction  of Nigerian enterprises that can easily float them, as well as their unsecured nature, which limits their potential to meaningfully influence economic growth. It is possible to detect that the money market contains instruments/activities capable of stimulating Nigeria's economic performance. Based on the findings of the study, we advocate for the continuous flotation of treasury bills and certificates of deposit, as they considerably support economic growth in Nigeria. Furthermore, there is a need to rejuvenate bankers' acceptance because it greatly boosts economic growth.