INFLUENCE OF MONEY MARKET INSTRUMENTS ON LIQUIDITY OF QUOTED INDUSTRIAL GOODS MANUFACTURING COMPANIES IN NIGERIA

This study examined the effect of money market instrument on the liquidity of quoted industrial goods manufacturing firms in Nigeria. Time series data was sourced from Central Bank of Nigeria Statistical bulletin and publications of Nigeria Bureau of Statistics while liquidity variable was sourced from financial statement of the quoted industrial goods manufacturing firms. Liquidity was modeled as the function of treasury bills, commercial papers, bankers’ acceptance, treasury certificate and certificate of deposit. R-square, probability coefficient, Tstatistics, Durbin Watson and f-statistic were used to determine the extent to which money market instrument affect commercial investment activities. The study found explanatory power R2 of the regression model showed that money market instruments revealed strong ability to predict liquidity of the quoted industrial goods manufacturing firms as accounted for about 77.9% of the cross sectional variations in the dependent variable of liquidity. The study further found positive relationship between bankers’ acceptance and certificate of deposit with liquidity of the quoted firms but negative relationship with commercial paper, treasury bills and treasury certificate to liquidity. The study concludes that there is mix relationship between money market instrument and illiquidity of the quoted industrial goods manufacturing firms. The study recommends that money market should be developed to enhance liquidity management of firms. The regulatory authorities should formulate strategies of managing the money market instruments should be made available for corporate managers.