EFFECT OF INTEREST RATE REFORMS ON ECONOMIC GROWTH OF NIGERIA (1986 - 2013)

Anthony C. Nkemakolam

Abstract


The study investigates the effect of bank interest rate reforms on economy growth of Nigeria with annual time series data from 1986 to 2013. Econometric evidence reveals stationary of the variables at their first differences while the Johansen co-integration approach also confirms the presence of one co-integrating relationship at one percent and five percent levels of significance. In addition, Ordinary Least Square results indicate that bank interest rate reforms have significant negative effect on economic growth in Nigeria. The study further shows that, bank interest rate reforms have shown to have very high explanatory influence on Nigerian economy, which indicates that, banking sector reform is a veritable tool for repositioning and reorienting Nigerian economy. The study recommends among others that, monetary authorities should continue to allow the market forces of demand and supply to determine interest rate regime with little guided intervention and monitoring the performance/trends to ensure effective contributions of interest rate on savings, investment and the growth of the economy.

Keywords


Interest Rate, Bank Sector Reforms, Economic Growth, Monetary Policy, Nigeria

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References


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