The Role of Money Market in the Econmi Growth of Nigeria

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The financial markets are types of markets designed for the creation and disposition of financial assets. There are two sections of the financial markets in Nigeria, namely: money market and capital market (Central Bank of Nigeria-CBN, 2004; 2007). A financial asset is created when one party in exchange for cash issues a receipt of acknowledgement which entitles the holder a claim of pecuniary nature against future interests of the issuer. Financial assets fall into three general categories namely: a) Money – issued by the Central Bank of a country on behalf of the Government of the country as paper currency and coins; b) Debt – issued by corporate and Government units; and c) Shares – issued by companies. Investment that promotes liquidity and gives immediate income requires short-term funding and varies from few hours and one year. Capital market is a collection of institutions set up for the granting of medium and long term loans (Oloyede, 1999). Unlike the money market, it is a market for government securities, corporate bonds, the mobilization and utilization of long-term funds for development – the long term end of the financial system. One of the greatest achievements of the CBN since it was established in July, 1959 has been the gradual development of the financial system. The system consists primarily of the money market for short term lending and borrowing as well as capital market for long term funding. To Oloyede (1999) organized money market is a market for short-term investible fund where short term
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