Discount houses are a recent addition to the Nigerian financial system's matrix.Discount houses are non-bank financial institutions which shift funds between the Central Bank on one hand and licensed banks and other financial institutions on the other hand, through the provision of discounting and re-discounting of eligible short - term securities such as treasury bills and certificates and commercial bills.
Discount houses are art Institutionalized mechanism for smoothing out the surpluses and shortfalls in the supply of, or demand for liquid funds.
There is no gainsaying :hat discount houses are relevant to the Nigerian financial system, but thd question really is "how feasible are they"? The answer to this question was one of the main objectives of this study. Several factors are militating against the successful introduction of discount
houses in Nigeria. Firstly, Nigerian banks do not respond adequately to the issue of treasury instruments in-spite of the safety of the securities.
Secondly, the current inter-bank interest rate of 105% may not induce banks to invest in treasury securities which yield only 17%. These days, banks and other financial institutions seem more interested in investing in schemes which, although might be more risky, would yield extra-ordinary profits within the shortest possible time. Thirdly, the usual administrative bottlenecks which have come to be known as
the "Nigerian factor" is frustrating their take off.
The Apex Bank has a major role to play if the dream of discount houses is to get to fruition. This they Ce n do through improvements in their supervisory and regulatory functions,
