Best answer: Why is money market necessary in Nigeria?

3.6 Functions of the Nigerian Money Market (a) It provides the basis for operating and executing an effective monetary. … It thus helps them to diversify their assets holding by providing them with a forum for investment of their surplus cash.

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 is money market simple words?

Definition: Money market basically refers to a section of the financial market where financial instruments with high liquidity and short-term maturities are traded. … It is used by many participants, including companies, to raise funds by selling commercial papers in the market.

Is Nigeria money market well developed?

In Nigeria, the money market is not yet vibrant and developed. This is so because the market is currently facing liquidity problems. The market is largely dominated by government instruments such as treasury bills and bonds, with a wide gap of deposit and lending rates or very high cost of borrowing when viewed.

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What is the money market and how does it contribute to economic growth?

The basic functions of the Nigeria money market according to Nwosu and Hamman (2008) is to facilitate the raising of short-term funds from the surplus sector to the deficit sector of the economy. The money market allows money available for short periods to be directed to those who can use them.

What is the role of money in economic development?

A monetary economy is one in which goods are sold for money and money is used to buy goods. Money Promotes Productivity and Economic Growth: … This raises the demand for money to finance the increased transactions brought about by the expanded level of economic activity.

What is 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.

Why money market is importance in borrowing money by the government?

Money market promotes the growth and development of the economy. … Money market provides assistance in formation of capital. It also offers non-inflationary finance sources to government. This is achieved by issuing treasury related bills for the purpose of raising short loans.

Is an example of Unorganised money market?

Answer. 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.

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Can you lose money on a money market account?

Money market accounts are insured by the Federal Deposit Insurance Corp. (at banks) and the National Credit Union Administration (at credit unions), so you won’t lose your deposits even if the financial institution goes out of business.

How safe is a money market?

Both money market accounts and money market funds are relatively safe. Banks use money from MMAs to invest in stable, short-term, low-risk securities that are very liquid. Money market funds invest in relatively safe vehicles that mature in a short period of time, usually within 13 months.

Where can I invest my money in Nigeria?

Five ways to invest money in Nigeria for beginners

  • Nigerian Stock Exchange. The Nigerian Stock Exchange is a place to consider when searching for where to put some money. …
  • Treasury Bills. Loading… …
  • Fixed Deposits. A fixed deposit is a type of short-term financial investment sold by banks to its depositors. …
  • Eurobonds. …
  • Money market funds.


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