The money market in Nigeria offers opportunity for trading in short-term instruments and also provides the basis for the implementation of monetary policy. The major short-term instruments traded include Treasury Bills, Treasury Certificates, Call Money, Certificate of Deposits and Commercial Papers. Prior to 1993, the money market was dominat ed by deposit money banks. The number of participants in the money market has increased substan tially with the establishment of discount houses and low income/rural sector target institutions like the People's Bank of Nigeria and Community banks. Activities in the money market have increased sub stantially with the deregulation of the financial sec tor in September 1986.
As at 1997, total instruments outstanding in the market amounted to N251,317.6 million. Currently, the major participants in the money market include:
(i) Discount Houses: Established first in 1993, discount houses provide discount ing and rediscounting facilities in gov ernment short-term securities. As at 1997, there were five discount houses with total asset of M6,996.1 million.
(ii) Commercial Banks: These are the major players in the money market and have been in existence in Nigeria since 1892. The deregulation of the financial sector in 1986 resulted in rapid growth in the number of commercial banks. For instance, the number of commercial banks rose from 30 in 1986 to 64 in 1997. Total assets/liabilities stood at M578.543.5 million in 1997 while deposit liabilities amounted to N267,378.3 million in the same year. Commercial banks also accounted for 83.9 and 89.7 per cent of the banking system's total assets and deposit liabili ties, respectively, in 1997.
(iii) Merchant Banks: Merchant banks have continued to play their role of pro viding medium-to-long term financing by engaging in activities such as equip ment leasing, loan syndicating, debt fac toring and project financing. These are in addition to acting as issuing houses and advisers for clients sourcing funds in the capital market. From only one in 1960, merchant banks have grown to about 51 with 147 branches in 1997 and total assets amounting to M118,967.6 million. In recent years, some merchant banks have converted to commercial banks with a lot more showing their will ingness to do so.
(iv) People's Bank of Nigeria: The People's Bank of Nigeria was estab lished in 1988 to meet the credit needs of small borrowers who cannot satisfy the stringent collateral requirements normally demanded by conventional banks. The activities of the bank have expanded since its inception such that by the end of 1997 there were 278 branches with total assets of 141,137.4 million and total loans and advances of M360.1 million.
(v) Community Banks: These are self sustaining financial institutions owned by local communities to provide financial services to members of the communi ties. They are under the supervision of the CBN and the National Board for Community Banks (NBCB). The first community bank commenced operation in December 1990 and by end of 1997, the number increased to 1,015 with total assets, deposit liabilities and loans and advances of M5.321.2 million, N2,511.3 million and MI,891.0 million respectively