Global Journal of Commerce & Management Perspective
Open Access

Abstract

Interest Rate Regime and Macroeconomic Stability in Nigeria

Ayano David Ayanniyi

The total interest on an investment depends on the timescale the interest is calculated on, because interest paid may be compounded. In finance, the effective interest rate is often derived from the yield, a composite measure, which takes into account all payments of interest and capital from the investment. Irrespective of the motives of possessing money, it is customary for countries all over the World to use interest rate and minimum rediscount rate to control the supply of money in the circulation. However, this study examined the impact of interest rate (lending) on Gross National Saving, Inflation, Gross Fixed Capital Formation, Gross Domestic Products, Gross Investment and National Income from 1981 to 2009, in Nigeria. This study explored econometrics model with interest rate as dependent variables while the independent variables include: Gross National Saving, Inflation, Gross Fixed Capital Formation, Gross Domestic Products, Gross Investment and Minimum Rediscount Rate, National Income. This paper used Multiple Regression for its analysis and results show that the specified model is highly significant with R- Square value equal 0.671733 (i. e. coefficient of determination), while the independent variables viz: inflation rate, gross domestic product, capital formation, national saving,, national income, investment and minimum rediscount rate of the equation explain 67% of the total variation in interest rate. The table value of F- statistics is 2.45 at v 1 = 8 and v 2 = N-K = 20 (degree of freedom), while the regression analysis shows the estimated value of F-statistics equal 5.846, the foregoing measure the high level of significant of the estimated equation. In addition Durbin Watson statistics value is 2.353, which also measure the high level of significant of the estimated equation.