Impact of Interest Rate Deregulation on Investment Growth in Nigeria
The study examined the impact of interest rate liberalization on investment in Nigeria from 1961 to 2017 using error correction model (ECM) and variance decomposition of vector autoregressive model. The empirical findings of the study showed that interest rate liberalization has no significant impa...
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| Format: | Article |
| Language: | English |
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EconJournals
2020-03-01
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| Series: | International Journal of Economics and Financial Issues |
| Online Access: | https://www.econjournals.com/index.php/ijefi/article/view/9260 |
| _version_ | 1797911481743835136 |
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| author | Osuji Obinna |
| author_facet | Osuji Obinna |
| author_sort | Osuji Obinna |
| collection | DOAJ |
| description |
The study examined the impact of interest rate liberalization on investment in Nigeria from 1961 to 2017 using error correction model (ECM) and variance decomposition of vector autoregressive model. The empirical findings of the study showed that interest rate liberalization has no significant impact on investment in Nigeria. The result further showed that prime lending rate had a negative insignificant impact on investment in Nigeria both in the pre and post liberalization period. Private sector credit and Nominal exchange rate were also observed to be insignificant factors explaining variations in investment in Nigeria. However, national income and government expenditure exerted a positive and negative significant impact on investment respectively. The study therefore recommended that government through the Central Bank of Nigeria should use her monetary policies to influence interest rate in such a way as to stimulate investment growth in the country instead of allowing it to be freely determined by the market forces as the theory on liberalization suggests.
Keywords: Interest rate, Investment, Nigeria
JEL Classifications: E43, E22
DOI: https://doi.org/10.32479/ijefi.9260
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| first_indexed | 2024-04-10T11:41:22Z |
| format | Article |
| id | doaj.art-f359ed1397dc4009bdd9765acc18b230 |
| institution | Directory Open Access Journal |
| issn | 2146-4138 |
| language | English |
| last_indexed | 2024-04-10T11:41:22Z |
| publishDate | 2020-03-01 |
| publisher | EconJournals |
| record_format | Article |
| series | International Journal of Economics and Financial Issues |
| spelling | doaj.art-f359ed1397dc4009bdd9765acc18b2302023-02-15T16:17:33ZengEconJournalsInternational Journal of Economics and Financial Issues2146-41382020-03-011024423Impact of Interest Rate Deregulation on Investment Growth in NigeriaOsuji Obinna0Michael okpara university of agriculture, umudike, Nigeria The study examined the impact of interest rate liberalization on investment in Nigeria from 1961 to 2017 using error correction model (ECM) and variance decomposition of vector autoregressive model. The empirical findings of the study showed that interest rate liberalization has no significant impact on investment in Nigeria. The result further showed that prime lending rate had a negative insignificant impact on investment in Nigeria both in the pre and post liberalization period. Private sector credit and Nominal exchange rate were also observed to be insignificant factors explaining variations in investment in Nigeria. However, national income and government expenditure exerted a positive and negative significant impact on investment respectively. The study therefore recommended that government through the Central Bank of Nigeria should use her monetary policies to influence interest rate in such a way as to stimulate investment growth in the country instead of allowing it to be freely determined by the market forces as the theory on liberalization suggests. Keywords: Interest rate, Investment, Nigeria JEL Classifications: E43, E22 DOI: https://doi.org/10.32479/ijefi.9260 https://www.econjournals.com/index.php/ijefi/article/view/9260 |
| spellingShingle | Osuji Obinna Impact of Interest Rate Deregulation on Investment Growth in Nigeria International Journal of Economics and Financial Issues |
| title | Impact of Interest Rate Deregulation on Investment Growth in Nigeria |
| title_full | Impact of Interest Rate Deregulation on Investment Growth in Nigeria |
| title_fullStr | Impact of Interest Rate Deregulation on Investment Growth in Nigeria |
| title_full_unstemmed | Impact of Interest Rate Deregulation on Investment Growth in Nigeria |
| title_short | Impact of Interest Rate Deregulation on Investment Growth in Nigeria |
| title_sort | impact of interest rate deregulation on investment growth in nigeria |
| url | https://www.econjournals.com/index.php/ijefi/article/view/9260 |
| work_keys_str_mv | AT osujiobinna impactofinterestratederegulationoninvestmentgrowthinnigeria |