Money Market Instruments and Price Stability in Nigeria: 1981 – 2021

Abstract

The study examined money market instruments and price stability in Nigeria. The study specific objectives include to investigate the relationship between treasury bills, treasury certificates, development loans stock, bankers’ acceptance, commercial papers and federal government of Nigeria bonds on consumer price index in Nigeria. The study adopted purposive sampling technique and the sample size consist time series data from 1981 to 2021. The study used secondary data obtained from Central Bank of Nigeria (CBN) statistical bulletin and National Bureau of Statistics (NBS) and the data were analysed using univariate, bivariate and multivariate analysis. The findings from the error correction model indicated that treasury bills negatively and insignificantly influence consumer price index in Nigeria; treasury certificates positively and significantly influence consumer price index in Nigeria; development stocks positively and significantly affects consumer price index in Nigeria; certificates of deposits positively and insignificantly influence consumer price index in Nigeria; commercial papers negatively and insignificantly influence consumer price index in Nigeria; bankers’ acceptance positively and significantly influence consumer price index in Nigeria and federal Government of Nigeria bonds positively and insignificantly impact on consumer price index in Nigeria. On the basis of the findings, the study concludes that money market instruments on the short and long run affects price stability in Nigeria. Hence, the study recommends amongst others that government should established effective and efficient stabilization policies and quality of public sector governance that would ensure that prices of goods and services and money market instruments are stable for sustainable economic growth of Nigeria.