Developments in the financial system during the fourth quarter of 1989.

Abstract

The paper attempts to analyse the financial system increased activity during the fourth quarter of the year as a result of institutional developments including the introduction of auction-based system for the issue of Federal Government treasury securities and seasonal factors, whereby the issue rate on the treasury securities are based on the competitive bids of authorized dealers (commercial and merchant Banks). Another major development during the quarter was the establishment of the Peoples Bank of Nigeria in October 1989, to provide loans to borrowers in the low income category, who normally have restricted access to institutional credit. In another development,due to the various restrictive policy measures adopted during the year, the banks made increased use of the CBN rediscount window during the fourth in order to minimize the effects of the squeeze on their liquidity. Money market activities increased while the capital market witnessed mixed developments.