What are the money market instruments in Nigeria?

Bank Deposit, Treasury Bills, Mutual Funds, Commercial Papers and Bankers’ acceptance are some of the Money Market Instruments available in Nigeria. They are financial investments where you place funds for a short period of time not more than 1 year but subject to roll over.

What is the first instrument that was ever issued in the Nigeria money market?

Treasury Bills The Treasury Bills Ordinance of 1959 authorized the first treasury bills issue in Nigeria.

What instruments are traded in the money market?

Money market instruments consist of Treasury bills, federal agency notes, certificates of deposit (CD), commercial papers, bankers’ acceptances, repurchase agreements (repos), among others.

When was money market established in Nigeria?

1959 The Nigerian money market came into existence soon after the establishment of a central bank in 1959. Like any other money market, the main reason for the establishment of the Nigerian money market was to transfer funds from one economic unit to another for relatively short periods of time.

What are the advantages of money market?

Liquidity and Safety: The market promotes trade in securities that are in reasonably high demand, hence typically liquid. This means that they can be traded with comparative ease, and investors can quickly get their money out. It also ensures the safety of financial assets.

What are new money market instruments?

The main money market instruments are Treasury bills, commercial papers, certificate of deposits, and call money. It is highly liquid as it has instruments that have a maturity below one year. Most of the money market instruments provide fixed returns.

Who is the most important institution in the money market?

The central bank is the apex institution in the money market of a country. It is the lender of the last resort. It means that the member banks can approach the central bank for loans and advances during emergency.

How does the money market work?

Money market accounts pay a variable interest rate, allowing you to earn a return on your money. It’s common for these accounts to have tiered rates, meaning higher balances are rewarded with a higher annual percentage yield (APY). Money market accounts tend to offer higher yields than typical savings accounts.

Why money market is needed?

Functions of the Money Market. The money market contributes to the economic stability and development of a country by providing short-term liquidity to governments, commercial banks, and other large organizations. Investors with excess money that they do not need can invest it in the money market and earn interest.

What are the five major problems of money market in Nigeria?

The problems include: liquidity crisis, non-performing loans, growing gap between lending and deposit growth, widening current account deficit, a distortion in the interest rate market and a lack of skilled manpower.

What are the disadvantages of money market?

Disadvantages of a Money Market Account

• Minimums and Fees. Money market accounts often need a minimum balance to avoid a monthly service charge, which can be $12 per month or more.
• Low Interest Rate. Compared to other investments, money market accounts pay a low interest rate.
• Inflation Risk.
• Capital Risk.

  What is an disadvantage of a money market account?

  Money market investing can be very advantageous, especially if you need a short-term, relatively safe place to park cash. Some disadvantages are low returns, a loss of purchasing power, and that some money market investments are not FDIC insured.

  Is an example of Unorganised money market?

  Mortgage Banks, Cooperative Banks, Insurance Companies etc. and call loan brokers, and stock brokers. The unorganised sector of the money market is largely made up of indigenous bankers, money lenders, traders, commission agents etc., some of whom combine money lending with trade and other activities.

  What are the important money market instruments?

  Instruments of the Money Market

  • Promissory Note: A promissory note is one of the earliest type of bills.
  • Bills of exchange or commercial bills.
  • Treasury Bills (T-Bills)
  • Call and Notice Money.
  • Inter-bank Term Market.
  • Commercial Papers (CPs)
  • Certificate of Deposits ( CD’s )
  • Banker’s Acceptance (BA)

  Is the function of money market?

  The money market provides financing to local and international traders who are in urgent need of short-term funds. It provides a facility to discount bills of exchange, and this provides immediate financing to pay for goods and services. International traders benefit from the acceptance houses and discount markets.

  Who controls the money market?

  Money Market is a segment of the financial market in India where borrowing and lending of short-term funds take place. The maturity of money market instruments is from one day to one year. In India, this market is regulated by both RBI (the Reserve bank of India) and SEBI (the Security and Exchange Board of India).

  What are the challenges of money market?

  The following are the key challenges confronting the financial markets development in Nigeria

  • Inadequate skills for financial products development:
  • The inadequate collaboration of regulators and stakeholders.
  • Unavailability of investible fund for long term financial products.
  • Weak risk management.

  What are common instruments of money market?

  What are some examples of money market instruments? The money market is composed of several types of securities including short-term Treasuries (e.g. T-bills), certificates of deposit (CDs), commercial paper, repurchase agreements (repos), and money market mutual funds that invest in these instruments.

  What are the five money market instruments?

  The important institutions of money market are commercial banks, central bank, acceptance house, nonbank financial institutions, bill brokers, etc. 1. Commercial Banks: Commercial banks are the most important constituents of the money market.

  What are the three money market instruments?

  What is the main problem of money market?

  Shortage of funds: Money market faces a shortage of funds due to inadequate savings. The low per capita income (PCI), poor banking habits among the people, indulgence in wasteful consumption, inadequate banking facilities in the rural areas, etc. have also been responsible for the paucity of funds in the money market.

  Drawbacks of Money Market Accounts

  • Minimum balance requirements. Every bank has different rules for the minimum amount needed to open a money market savings account.
  • Interest rates.
  • Fees.
  • Withdrawal restrictions.

  revealed specifically that money market instruments (treasury bills, commercial papers, and federal government bond) have positive relationships and significant effects on bank performance in Nigeria. Notably, treasury bills, commercial papers and federal government bonds were the main contributors to bank performance while bankers

  When was the first money issued in Nigeria?

  Their issue for the first time in Nigeria (in April 1960) was provided for under the Treasury Ordinance of 1959. It was issued in Nigeria in multiples of #2000 (later reduced to #100 in order to expand the coverage of holders for 91 days and at fixed discount.

  Why are money market instruments offer low returns?

  noted that money market instruments are awfully traded in high denominations and offer significantly lower return than most other securities. Banks see money market instruments as highly regulated with their rates fixed by regulatory agencies or not definite and low returns. The instruments with high returns for banks witness low patronage.