Impact of Money Market on the Liquidity of Some Selected Quoted Banks in Nigeria.

Abstract:

This study explores the impact of the money market on the liquidity of selected quoted banks in Nigeria, highlighting the critical role of financial intermediation in promoting economic growth. It establishes the money market's importance in facilitating short-term lending and improving banks' liquidity management, alongside the significant influence of Central Bank of Nigeria (CBN) monetary policies. Through an analysis of five banks from 2014 to 2023, the study employs a multiple linear regression econometric technique, revealing a positive correlation between banks' working capital and savings deposit rates. Conversely, it finds no statistically significant relationship between the interbank call rate and the Monetary Policy Rate (MPR), indicating that other factors may drive interbank market dynamics. The findings suggest that stable savings deposit rates bolster banks' liquidity, while the volatility in interbank call rates necessitates improved risk management strategies. The study recommends that policymakers focus on stabilizing savings deposit rates and enhancing liquidity management practices. Further research is encouraged to uncover determinants of interbank rates and their interplay with monetary policy.