The Relationship between Interest Rate and Economic Growth in Nigeria: An Error Correction Model (ECM) Approach

Lyndon M. Etale and Peter E. Ayunku
Additional contact information
Lyndon M. Etale: Department of Finance and Accountancy, Faculty of Management Sciences, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria
Peter E. Ayunku: Department of Finance and Accountancy, Faculty of Management Sciences, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria

International Journal of Economics and Financial Research, 2016, vol. 2, issue 6, 127-131

Abstract: This study examined the relationship between interest rate and economic growth in Nigeria, using secondary time series panel data for the period 1985 – 2014. Data was collected from various issues of the Central Bank of Nigeria Statistical Bulletin and the National Bureau of Statistics. The study employed Augmented Dicker-Fuller (ADF) unit root tests as well as Johansen co-integration test followed by Error Correlation Model (ECM) approach. The ADF unit root test results indicated that the variables are all stationary at first difference. The variables were integrated of order one (1) which implies that the null hypothesis of non-stationary for all the variables of interest is rejected. The Johansen co-integration test result revealed the existence of two co-integrating relationship between the variables at 5% level of significance. The study proceeded to perform the ECM approach and found that interest rate is inversely related to economic growth, but the relationship is statistically insignificant. The recommended that monetary authorities should adopt appropriate polices that would promote and stimulate economic growth in Nigeria.

Keywords: Interest rate; Deregulation; Investment; Savings; Gross domestic product; Economic growth. (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.arpgweb.com/pdf-files/ijefr2(6)127-131.pdf (application/pdf)
http://www.arpgweb.com/?ic=journal&journal=5&month=06-2016&issue=6&volume=2 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2016:p:127-131

Access Statistics for this article

International Journal of Economics and Financial Research is currently edited by Dr. Abu Hassan Bin Md Isa

More articles in International Journal of Economics and Financial Research from Academic Research Publishing Group Rahim Yar Khan 64200, Punjab, Pakistan.
Bibliographic data for series maintained by Managing Editor ().