International Journal of Business & Law Research 3(1):81-88, Jan-Mar 2015(ISSN: 2360-8986)



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INTEREST RATE DETERMINANTS IN A DEREGULATED NIGERIAN ECONOMY


Emmanuel I. AJUDUA1 & Osmond N. OKONKWO2*
1Department of Economics, Faculty of Social Sciences, Imo State University, Owerri, Nigeria
2Department of Economics, AlvanIkoku Federal College of Education, Owerri, Nigeria

ABSTRACT
The main focus of this research study is to look into the determinants of interest rates in Nigeria. Based on theoretical underpinnings three explanatory variables were included in this study which are; inflation rate, money supply and monetary policy rate in order to evaluate their impact on the trend of interest rate. Data for the study were obtained from the Central Bank of Nigeria statistical bulletin and were analyzed and tested using the error correction mechanism (ECM). The result of the findings revealed that: there existed a significant relationship between interest rate and the explanatory variables selected in the study. It was recommended that an investment-friendly rate of interest is necessary for promoting economic growth; infrastructural decay should be addressed as infrastructural expenditure incurred by banks are passed to borrowers through interest rate.
Key Words: Interest rate, Deregulation, Monetary policy rate and Economic growth.