This study examined the effect of money market instruments on domestic savings in Nigeria. The study specifically sought to determine the extent to which money market instruments affect domestic savings. Time-series data covering the period from 1990 to 2024 were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and publications of the National Bureau of Statistics (NBS). Domestic savings was modeled as a function of Treasury Bills, Commercial Papers, Bankers’ Acceptances, and Eligible Development Funds. The study employed econometric techniques, while the R-squared, probability coefficients, t-statistics, Durbin-Watson statistic, and F-statistic were used to evaluate the relationship between money market instruments and domestic savings. The findings revealed that 63.1 percent of the variation in domestic savings was explained by variations in money market instruments. At lag one, Bankers’ Acceptances and Treasury Bills were found to have negative effects on domestic savings, while Commercial Papers and Treasury Bills had positive effects on domestic savings in Nigeria. Based on these findings, the study concludes that money market instruments significantly influence changes in domestic savings in Nigeria. The study recommends that fiscal policy should be aligned with monetary policy objectives to minimize distortions in the money market. Excessive government borrowing should also be curtailed through diversification of financing sources, improved revenue mobilization, and further deepening of the money market to enhance domestic savings. Regulatory authorities should formulate effective strategies for managing money market instruments, while government Treasury Bills should be made readily available to commercial banks, as this could contribute to increased domestic savings.

Keywords: Money Market Instruments, Domestic Savings, Treasury bill, Commercial Paper, Bankers Acceptance.