THE ROLE OF COMMERCIAL BANKS IN THE DEVELOPMENT OF MONEY AND CAPITAL MARKET IN NIGERIA

ABSTRACT

The study examined the role of commercial banks towards the development of money and capital market in Nigeria. A total for five management staff from seven (7) banks making about thirty (30) respondents were sampled and published data were collected from central bank of Nigeria (C.B.N) and the Stock Exchange in Lagos. The result revealed that a positive and significant relationship existed between growth in commercial banking and the activities in the money market in Nigeria. It was also revealed that the level of liquidity of commercial banks do determine their investments in the money and capital markets. Hence, commercial banks were advised to be thorough in their service delivery while government should create the enabling environment for successful banking operations.

CHAPTER ONE

INTRODUCTION

1.1. Background of the Study

The financial sector provides positive avenues in several fields which indirectly increase people’s standards of living and reduce the poverty level; a well-developed financial sector may increase investments, which can promote money market. (Boyd and Prescott 1986) According to Boyd and Prescott (1986), these principles identified two important roles performed by financial intermediaries. Firstly, the financial intermediaries identify the best production technologies and reduce the costs of acquiring and processing information which improves resource allocation. Secondly, they boost the rate of technological innovation by identifying those entrepreneurs with the best chances of successfully initiating new goods and production processes.