The study investigated the influence of banks’ financing activities through money market investment and borrowing sources on the financial soundness of banks. Specifically, the study examined the relationship between aggregate money funds and credit to banks and liquidity-based soundness of Nigerian banking sector. The study also examined the relationship between the aggregate money market funds and credit to banks and assets-based soundness of Nigerian banking sector. The study adopted the ex-post facto research design. Data was sourced from World Bank data base, Central Bank of Nigeria Statistical Bulletin for the period 1984-2022. Descriptive statistics and correlations were used in the analysis of data. Multiple regression analysis was further adopted to test the hypotheses at 5% level of significance. Findings from the investigation revealed that; aggregate money funds and credit has a significant effect on liquidity-based soundness of Nigerian banking sector. The study also revealed that aggregate money market funds and credit had a significant effect on assets-based soundness of Nigerian banking sector. The study thus concluded that money market instrument has weak although significant effect on banking soundness in Nigeria. The study therefore recommended among others that the CBN should strengthen regulatory frameworks and ensure strict compliance to mitigate risks associated with money market instruments. Regular audits and compliance checks can help maintain stability. Also, Implement advanced surveillance systems to monitor transactions and detect anomalies in real-time, thereby preventing fraudulent activities and ensuring transparency