THE IMPACT OF INTEREST RATE ON OTHER SELECTED MACROECONOMIC VARIABLES IN NIGERIA (1970-2010)

ABSTRACT

This study was embarked upon with a view to determining the impact of interest

rate on other selected macroeconomic variables in Nigeria. Data were sourced

from CBN Abuja and NBS. Data were analyzed using the ordinary least square

regression (OLS). Results indicate that: Interest rate is inversely related

investment and also negatively related with GDP. On the basis of the above

stated findings some policy recommendations were made.(1)Government

should establish policies that encourage increase in savings deposit rate,

reduction in lending rates and also, efficient and reliable financial institutions

encourage people to save. (2) The require reserve ratio should be to strengthen

the lending rate of commercial banks. (3) We recommend that the government

and financial authorities should implement policies that favour income growth

such as job creation and increase in salaries and wage increase as these will

affect investment significantly.

TABLE OF CONTENTS

Title page

Approval page

Dedication

Acknowledgements

Abstract

Table of contents

CHAPTER ONE

INTRODUCTION

1.1 Background to the study1.2 Statement of the problem

1.3 Objectives of the study

1.4 Statement of Hypothesis

1.5 Significance of the study

1.6 Scope of the study

CHAPTER TWO

Literature review

2.1 Theoretical framework

2.1.1 Real and Nominal interest rate

2.1.2 Determination of long term and short term interest rate Review

2.1.3 Interest rate and the economic mechanism

2.1.4 Interest rate and the monetary policy

2.1.5 The demand and supply of money

2.1.6 A broad view of macroeconomic stability

2.1.7 Relationship between investment and interest rate

2.1.8 Concept of investment2.1.9 The relationship between interest rate and economic growth in Nigeria

2.2 Empirical reviews

2.3 Summary of findings

CHAPTER THREE

3.1 Research Methodology

3.1.1 Methodology

3.1.2 Model I: impact of interest rate on GDP

3.1.3 Model II: Impact of interest rate on investment

3.2. Method of evaluation

3.2.1 Evaluation technique based on economic criteria

3.2.2 Evaluation technique based on statistical criteria

3.2.3 Evaluation technique based on econometric criteria

CHAPTER FOUR

PRESENTATION AND ANALYSIS OF RESULT

4.1 OBJECTIVE I: Impact of interest rate on GDP

4.1.1 Evaluation based on economic criteria4.1.2 Evaluation based on statistical criteria

4.1.3 Evaluation based on econometric criteria

4.2. OBJECTIVE II: Impact of interest rate on investment

4.2.1 Evaluation based on economic criteria

4.2.2. Evaluation based on statistical criteria

4.2.3 Evaluation based on econometric criteria

CHAPTER FIVE

SUMMARY, POLICY RECOMMENDATION AND CONCLUSION

5.1 Summary of findings

5.2 Policy Recommendation

5.3 Conclusion

BIBLIOGRAPHY

APPENDIX A

APPENDIX B