Interest Rate Policy and the Growth of the Nigerian Economy (1990-2016)

Abstract

This study focused on the effect of interest rate policy on the growth of the Nigerian economy. It sought to assess the significance of interest rate, and to suggest measures that could enhance economic growth in Nigeria. To achieve the objective of the research, some macroeconomic indicators in the Nigerian economy, using an ex-post facto research design were applied. The data were analyzed using the Ordinary Least Square (OLS) method. From the examination, it was uncovered that there was a huge connection between financing cost and GDP in Nigeria. It was additionally found that there was a huge connection between rate for currency exchange and total national output in Nigeria. Inflation was likewise found to significantly affect total national output in Nigeria. In light of these discoveries, it is suggested that the Central Bank of Nigeria (CBN) ought to structure policy framework on the rate of interest that will dependably support and encourage culture of savings in the real sector. This can be accomplished by expanding the rate accruing to savings from foreign and local investors. Additionally, aggregate economic output should be seen as the bane of government policy thrust, through bringing down of rate charged to lending and expanding rate to savings, as this improves financial development.