MONEY MARKET OPERATIONS AND ECONOMIC DEVELOPMENT IN NIGERIA

The study examines effect of money market operation on economic development of Nigeria. The study adopts Treasury bill, 3months deposit rate, 6 months deposit rate, 12 months deposit rate and over 12 months deposit rate as proxies for money market operations while unemployment rate was used as a measure of economic development. Based on this, the study formulated five hypotheses and these were tested through Vector Error Correction Mechanism. Expos-facto research design is adopted in this study which is characterizes with quantitative or numeric description of historical data. The data for this study were obtained from secondary sources. This includes Central Bank of Nigeria Annual Report and CBN Statistical Bulletin. The data covers the period of thirty-three years from 1985-2017. The study found that Treasury bill has a negative effect on economic development. Also the over 12 months deposit rate has a negative but insignificant effect on economic development in Nigeria. The 12 months deposit rate on has a positive but insignificant on economic development in Nigeria. The result also shows that the deposit rate for 3 month and 6 month have a negative but significant effect on economic development in Nigeria. In line with the findings, the study concluded that money market operation has effect on economic development in Nigeria. Based on this the following recommendation are made. The Central Bank of Nigeria should implement flexible policies on the acquisition of Treasury bill and this will enhance the performance of money market in Nigeria.