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The Impact Of Interest Rate On Domestic Investment
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The relationship between interest rate and domestic investment has attracted the attention of economists and other economic experts. This study carried out an empirical analysis of the impact of interest rate on domestic investment in Nigeria covering the period 1980-2016. Data for the research was extracted from the central bank of Nigeria statistical bulletin. The methodology adopted in the research is the multiple linear regression with the application of Ordinary least Squares (OLS) technique. Findings from the study reveal that interest rate has a negative and significant impact on domestic investment in Nigeria, inflation has no significant impact on domestic investment in Nigeria and money supply has no significant impact on domestic Investment in Nigeria. It is therefore the recommendation for the study that the federal government through the Central Bank should boost the level of domestic investment through an optimal reduction in interest rate and the federal government should ensure a conducive and comfortable macroeconomic atmosphere so that domestic investment can strive.
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APPENDIX A - [ Total Page(s): 2 ]Appendix II
Unit Root Tests
Null Hypothesis: INVESTMENT has a unit root
Exogenous: Constant
Lag Length: 1 (Automatic - based on SIC, maxlag=9)
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TABLE OF CONTENTS - [ Total Page(s): 1 ]Title page Certification page Approval page Dedication Acknowledgement Abstract Table of content CHAPTER ONE: INTRODUCTION 1.1 Background of the Study 1.2 Statement of the Prob ... Continue reading---
CHAPTER ONE - [ Total Page(s): 1 ]INTRODUCTION 1.1 Background of the Study The behaviour of interest rates, to a large extent, determines the investment activities and hence economic growth of a country. Investment depends upon the rate of interest involved in getting funds from the market, while economic growth to a large extent depends on the level investment. According to Jhingan (2003), if the rate is high investment is at low level. A low rate of interest leads to an increase in investment. There is therefore a ... Continue reading---
CHAPTER TWO - [ Total Page(s): 4 ]Obamuyi (2009) investigated the relationship between interest rates and economic growth in Nigeria, using time series analysis and annual data from 1970 - 2006. The co-integration and error correction model were used to capture both the long-run and short-run dynamics of the variables in the model. The empirical results indicate that real lending rates have significant effect on economic growth. There also exists a unique long-run relationship between economic growth and its determinants, includ ... Continue reading---
CHAPTER THREE - [ Total Page(s): 1 ]METHODOLOGY This study makes use of econometric procedure in estimating the impact of interest rate on economic growth in Nigeria. The Ordinary Least Square (OLS) technique is employed in obtaining the numerical estimates of the coefficients in different equations. The OLS method is chosen because it possesses some optimal properties: its computational procedure is fairly simple and it is also an essential component of most other estimation techniques. Secondly, this technique has been adopte ... Continue reading---
CHAPTER FOUR - [ Total Page(s): 1 ]PRESENTATION AND ANALYSIS OF RESULTS 4.1 Unit Root Test In a research involving the use of time series data, it is ideal to carry out stationarity tests on the series to be used. This is justified on the grounds that data not found stationary have the tendency of yielding spurious regression results and thus misleading policy projections. Below is the variables made stationary with their corresponding order of integration. Table 4.1: Unit Root Test VARIABLE ... Continue reading---
CHAPTER FIVE - [ Total Page(s): 1 ]SUMMARY, CONCLUSION AND RECOMMENDATION 5.0 Summary of Findings The main focus of this research has been to carry out empirically the impact of rate on domestic investment in Nigeria covering the period 1980-2016. In the course of the study, the historical background of interest rate and investment were reviewed. Furthermore, the problems of interest rate fluctuations and its possible effect on investment was evaluated. The chapter two was a compendium of literature was the views and resear ... Continue reading---
REFRENCES - [ Total Page(s): 1 ]Adeyeye, U. (2006) Interest Rate Regulation, Deregulation and Saving Mobilization in Nigeria, 1970-1994. An unpublished M. Sc thesis, Dept of Economics, A. B. U. Zaria. Abdul, A. and Marwan, S. (2013) “Finance and Growth: Some Theoretical Considerations and A Review of the Empirical Literature” Economic Department Working Paper 228, Organization for Economic Co – operation and Development (OECD), Paris. Akomolate, A.S and Ajiboye, G.U (2015) “An Econometric Study of the Market fo ... Continue reading---
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APPENDIX A - [ Total Page(s): 2 ]Appendix II
Unit Root Tests
Null Hypothesis: INVESTMENT has a unit root
Exogenous: Constant
Lag Length: 1 (Automatic - based on SIC, maxlag=9)
... Continue reading---
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