Interest Rate Management and the Nigerian Economy (1986 — 2018)
Kalu, Uko Kalu *
Department of Banking and Finance, Enugu State University of Science and Technology, Enugu, Nigeria.
Anyanwaokoro Mike
Department of Banking and Finance, Enugu State University of Science and Technology, Enugu, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
This study sought to examine the impact of interest rate on the Nigeria’s economy during the pre and post Regulation periods (1986 – 2013). It also investigated the joint influence of Inflation, Investment, Exchange Rate, Money Supply and Monetary Policy Rate individually on the Gross domestic Product which was used a proxy for output as well as the causality between all the factors combined and gross domestic product. Ex post facto method was adopted In order to test the hypothesis, the researcher adopted Augmented Dickey Fuller, ARDL, Bound Test and Error Correction Model. The result showed that no significant relationship exists between Gross Domestic Product and Investment, Exchange Rate and Money Supply while still affirming that a significant relationship exist between Gross Domestic Product, Monetary Policy Rate and inflation. The eye of the authorities should be on Inflation at all times, Prudent management of our Oil earnings, adequate savings (Foreign Reserve) and investments as these will help stabilize the fluctuating exchange rate with its consequent influence on interest rate and economic growth.
Keywords: Interest rate management, exchange rate, monetary policy rate, inflation, gross domestic product, investments, money supply