**CHAPTER ONE**

**INTRODUCTION**

**1.1 BACKGROUND OF THE STUDY**

**STATEMENT OF PROBLEM**

**1.3**

**OBJECTIVES OF THE STUDY**

**1.4**

**RESEARCH QUESTION**

**1.5 RESEARCH HYPOTHESIS**

**1.6 SIGNIFICANCE OF THE STUDY**

**1.7 SCOPE AND LIMITATION OF STUDY**

**CHAPTER TWO**

**LITERATURE REVIEW**

**2.1 THEORETICAL LITERATURE: AND OVERVIEW**

**MONEY AND ITS ROLE ON THE ECONOMY**

**THEORIES OF MONEY**

**MONEY AND INFLATION RATE**

**2.2 EMPIRICAL LITERATURE**

**NIGERIA MONETARY POLICY FRAMEWORK**

**as an important and intermediate target for monetary policy. While this choice raise a key question in terms of why the CBN considered M**

_{2}**as the appropriate intermediate target instead of interest rate or nominal GDP or inflation targeting. Given the fact that interest rate and prices were controlled pre – SAP, it is not difficult to see why the CBN ruled out interest rate targeting or inflation targeting as viable policy options. Furthermore, the structure of the financial markets in less developed countries renders interest rate targeting ineffective. As Taylor (2004) pointed out that “if financial market are weak, the effectiveness of transmitting policy through interest rate will be limited”. With these controls and the constraints due to weak financial markets nominal GDP targeting may not have succeeded. As for the commitment to rules, many countries apply rules because policy rules may aid in focusing policy discussion in term or intermediate and operating targets. Over the past decades, many countries adopted the Taylor rule, which Taylor (2004), developed for the United States.**

_{2}**THE DEVELOPMENT OF THE NIGERIA MONEY MARKET**

**MONEY MARKET ROLE IN ECONOMIC GROWTH**

**MONEY MARKET INSTRUMENTS**

**THE ROLE OF MONEY MARKET IN THE DEVELOPMENT OF NIGERIA ECONOMY**

**Money market provides an opportunity to banks and other institutions to use their surplus fund profitable for short period. It provides no need commercial bank borrowing from the CBN when they run in short supply of cash. According to Noko (2011) money market help the government to easily borrow with a low interest on the basis of Treasury bill rather than borrowing from CBN that might lead to inflation in the economy. An efficient monetary policy is achieved through CBN control of the money market activities. It facilitates & promotes the safety of financial asset and thus encourages savings and investment in the economy thereby accelerating economic growth.**

**CHAPTER THREE**

**RESEARCH METHODOLOGY**

**3.1 INTRODUCTION: RESEARCH DESIGN**

**3.2 MODEL SPECIFICATION**

**, INT) …………………………… 3.1.1**

_{2}**+ b**

_{o}**TBILLS + b**

_{1}**INF + b**

_{2}**M**

_{3}**+ b**

_{2}_{4}INT + U

**…… 3.2.1**

_{t}**+ b**

_{o}**log TBILLS + b**

_{1}**log INF + b**

_{2 }**log M**

_{3 }**+ b**

_{2}**log INT + U**

_{4 }**……………… 3.2.2**

_{t}**= Broad money supply (Independent variable)**

_{2}**= Constant**

_{o}**, b**

_{1}**, b**

_{2}**, b**

_{3}**are the relative parameter or coefficient of the independent variables.**

_{4}**3.3 SOURCES OF DATA**

**3.4**

**MODEL EVALUATION**

**)**

^{2}**COEFFICIENT OF MULTIPLE DETERMINATIONS (R**It is used to measure the proportion of variations in the dependent variable which is explained by the explanatory variables. The higher the (R2) the greater the proportion of the variation in the dependent variable caused by changes in the independent variables.

^{2}):**STANDARD ERROR TEST (S.E):**It is used to test for the reliability of the coefficient estimates

**DECISION RULE:**

**If S.E <**

**/**

^{1}**b**

_{2}**, reject the null hypothesis and conclude that the coefficient estimate of the parameter is statistically significant. Otherwise accept the null hypothesis.**

_{i}**T – TEST:**It is used to test for statistical significance of individual estimate parameter. In this research, T – test is chosen because the population variance is unknown and the sample size is less than 30.

**DECISION RULE**

**DURBIN WATSON (DW):**It is used to test for the presence of auto – correlation (serial correlation).

**DECISION RULE**

**3.5**

**DATA DESCRIPTION AND TRANSFORMATION**

**and INT, as gotten from CBN statistical bulletin. The choice of logging this data is to further access their reliability and significance. E – View econometric software is used to run this regression.**

_{2}