{"id":3357,"date":"2025-08-16T17:37:49","date_gmt":"2025-08-16T17:37:49","guid":{"rendered":"https:\/\/journals.amssr.org\/grjesd\/?p=3357"},"modified":"2025-08-16T17:37:54","modified_gmt":"2025-08-16T17:37:54","slug":"impact-of-interest-rate-spread-on-domestic-investment-in-nigeria","status":"publish","type":"post","link":"https:\/\/journals.amssr.org\/grjesd\/2025\/08\/16\/impact-of-interest-rate-spread-on-domestic-investment-in-nigeria\/","title":{"rendered":"Impact of Interest Rate Spread on Domestic Investment in Nigeria"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Author<\/h2>\n\n\n\n<p>UWAKWE Queendaline Chinyere&nbsp; (Ph.D)<\/p>\n\n\n\n<p><em>Department of Economics&nbsp; Management and Social Sciences<\/em><\/p>\n\n\n\n<p><em>Godfrey Okoye University&nbsp; Thinkers Corner&nbsp; Enugu Nigeria.<\/em><\/p>\n\n\n\n<p><a href=\"mailto:quwakwe@gouni.edu.ng\"><em>quwakwe@gouni.edu.ng<\/em><\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Download PDF<\/h2>\n\n\n\n<div data-wp-interactive=\"core\/file\" class=\"wp-block-file\"><object data-wp-bind--hidden=\"!state.hasPdfPreview\" hidden class=\"wp-block-file__embed\" data=\"https:\/\/journals.amssr.org\/grjesd\/wp-content\/uploads\/sites\/4\/2025\/08\/Impact-of-Interest-Rate-Spread-on-Domestic-Investment-in-Nigeria-GRJESD-AMSSRN.docx.pdf\" type=\"application\/pdf\" style=\"width:100%;height:600px\" aria-label=\"Embed of Impact of Interest Rate Spread on Domestic Investment in Nigeria GRJESD AMSSRN.docx.\"><\/object><a id=\"wp-block-file--media-3cb04470-205c-47f0-b961-b86d1580e2a8\" href=\"https:\/\/journals.amssr.org\/grjesd\/wp-content\/uploads\/sites\/4\/2025\/08\/Impact-of-Interest-Rate-Spread-on-Domestic-Investment-in-Nigeria-GRJESD-AMSSRN.docx.pdf\">Impact of Interest Rate Spread on Domestic Investment in Nigeria GRJESD AMSSRN.docx<\/a><a href=\"https:\/\/journals.amssr.org\/grjesd\/wp-content\/uploads\/sites\/4\/2025\/08\/Impact-of-Interest-Rate-Spread-on-Domestic-Investment-in-Nigeria-GRJESD-AMSSRN.docx.pdf\" class=\"wp-block-file__button wp-element-button\" download aria-describedby=\"wp-block-file--media-3cb04470-205c-47f0-b961-b86d1580e2a8\">Download<\/a><\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Abstract<\/strong><\/h2>\n\n\n\n<p><strong>Research Objectives:<\/strong> The study examined the impact of interest rate spread on domestic investment in Nigeria, focusing on the relationship between lending rates, deposit rates, and monetary policy rates. It aimed to determine how variations in interest rate spread affect capital accessibility and overall investment performance in the economy between 1981 and 2024.<\/p>\n\n\n\n<p><strong>Methodology:<\/strong> To achieve these objectives, the research employed the Autoregressive Distributed Lag (ARDL) model and the Granger Causality test. These econometric techniques were used to capture both the short- and long-run dynamics of the relationship between interest rate spread and domestic investment, as well as to test the causal links among the key variables within the study period.<\/p>\n\n\n\n<p><strong>Findings and Conclusion:<\/strong> The results revealed that for a given lending rate, an increase in borrowing rate reduces the interest rate spread, thereby affecting bank gains. In contrast, lower lending rates tend to encourage investment in the economy, though they may also trigger economic contraction. The study concludes that interest rate spread significantly influences the accessibility of capital and the level of domestic investment in Nigeria, with lending and borrowing rates\u2014largely guided by monetary policy\u2014playing a decisive role in shaping bank performance and economic growth.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong><em>Key words<\/em><\/strong><em>: Interest Rate Spread, Domestic Investment,&nbsp; Deposit rate, Borrowing rate, Lending rate and monetary policy rate.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>References<\/strong><\/h2>\n\n\n\n<p>Acha I. A. &amp; Acha C. K. (2011). Interest Rates in Nigeria: An Analytical Perspective. <em>Research Journal of Finance and Accounting<\/em>, IISTE, 2, 3&nbsp; 34-36<\/p>\n\n\n\n<p>Afanasieff, T, Priscilla M L, and Marcio I. N. (2002).The determinants of bank interest spread in Brazil. Money affairs 15(2): 183-207. working paper series 46<\/p>\n\n\n\n<p>Agwu, C. (2015). 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Interest rate deregulation and private investment: Revisiting the McKinnon\u2013Shaw Hypothesis in Ghana.<\/p>\n\n\n\n<p>Osuji Obinna, 2020. &#8220;Impact of Interest Rate Deregulation on Investment Growth in&nbsp; Nigeria,&#8221;&nbsp;<a href=\"https:\/\/ideas.repec.org\/s\/eco\/journ1.html\" target=\"_blank\" rel=\"noopener\"><em>International Journal of Economics and Financial Issues<\/em><\/a><em>, Econjournals<\/em>,&nbsp;<\/p>\n\n\n\n<p>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10(2), 170-180.<\/p>\n\n\n\n<p>Ouma, S. A., Adongo, T. M., &amp; Were, M. (2017). Mobile financial services and&nbsp;<\/p>\n\n\n\n<p>financial inclusion: Is it a boon for savings mobilization?&nbsp; 7(1): 29-35<\/p>\n\n\n\n<p>Obidike, Ejeh, &amp; Ugwuegbe (2015) The impact of interest rate spread on the performance of the Nigerian banking industry. <em>Journal of Economic&nbsp; and&nbsp; Sustainable &nbsp; Development<\/em>. 6(12).<\/p>\n\n\n\n<p>Olajide (2012) in his study x-rays and re-investigates the Nigerian financial sector. Journal of Economics and Sustainable Development. 6(12).&nbsp;<\/p>\n\n\n\n<p>Ouma A.S Odongo M.T and Were .M (2017) Mobile financial services and financial inclusion: Is it a boon for savings mobilization? <a href=\"https:\/\/www.researchgate.net\/journal\/Review-of-Development-Finance-1879-9337\" target=\"_blank\" rel=\"noopener\"><em>Review of Development Finance<\/em><\/a><em>&nbsp;7(1)DOI:<\/em><a href=\"http:\/\/dx.doi.org\/10.1016\/j.rdf.2017.01.001\" target=\"_blank\" rel=\"noopener\"><em>10.1016\/j.rdf.2017.01.001<\/em><\/a><em>&nbsp;<\/em><\/p>\n\n\n\n<p>Owusu-Antwi, G., Banerjee, R., &amp; Antwi, J. (2017). Interest rate spread on bank profitability: The case of Ghanaian banks.<em> Journal of Accounting, Business and Finance Research,<\/em> 1(1), 34-45.&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p>Onwumere, J. U. J., Okore, A. O. and Imo, G. I. (2012). The Impact of Interest Rate. 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An autoregressive distributed lag Modeling\u00a0approach to co-integration analysis. Econometrics and economic theory in the 20th Century: The Ragnar Frisch Centennial Symposium, Strom, S. (ed.) Cambridge University Press.\u00a0\u00a0<\/p>\n\n\n\n<p>Quaden, G. (2004).\u00a0 Efficiency and stability in an evolving financial system.\u00a0Retrieved from: <a href=\"http:\/\/www.bnb.be\/Sg\/En\/Contact\/pdf\/2004\/sp04051.7en.pdf\" target=\"_blank\" rel=\"noopener\">www.bnb.be\/Sg\/En\/Contact\/pdf\/2004\/sp04051.7en.pdf<\/a>.<\/p>\n\n\n\n<p>Quartey, P. and G. Afful-Mensah (2014). Financial and monetary policies in\u00a0Ghana: A review of recent trends. <em>Review of Development Finance,<\/em> 4(2): 115-125.<\/p>\n\n\n\n<p>&nbsp;Rousseau and Wachtel (2011), the extent to which financial reforms impact the financial system. DOI:&nbsp;<a href=\"http:\/\/dx.doi.org\/10.2139\/ssrn.936219\" target=\"_blank\" rel=\"noopener\">10.2139\/ssrn.936219<\/a>.<\/p>\n\n\n\n<p>Tarus and Manyala (2018)&nbsp; Determinants of bank interest rate spread in Sub-Saharan African&nbsp; countries &nbsp;<em>African Journal of Economics and Management Studies<\/em>&nbsp; 9(3)<\/p>\n\n\n\n<p>Uchendu, O. A. (1993). Economic cost of electricity outages: evidence from a sample study of industrial and commercial firms in the Lagos area of Nigeria. <em>Economic and Financial Review,<\/em> 31(3), 183-195.<\/p>\n\n\n\n<p>Wang, Su, and Tao (2019).\u00a0 the causal link of short-term capital \ufb02ow and interest rate differential. <em>CBN Journal of Applied Statistics , <\/em>\u00a011(2),\u00a0 29-63\u00a0\u00a0<\/p>\n\n\n\n<p>Were and Wambua (2014) investigate the determinants of interest rate spreads in Kenya\u2019s \u00a0 banking sector\u00a0<a href=\"https:\/\/www.sciencedirect.com\/journal\/review-of-development-finance\" target=\"_blank\" rel=\"noopener\">https:\/\/www.sciencedirect.com\/journal\/review-of-development-finance<\/a> .\u00a0 4(2)\u00a0 73-82.\u00a0\u00a0<\/p>\n\n\n\n<p>Wikipedia (2023). <a href=\"https:\/\/en.wikipedia.org\/wiki\/Gross_private_domestic_investment\" target=\"_blank\" rel=\"noopener\">https:\/\/en.wikipedia.org\/wiki\/Gross_private_domestic_investment<\/a>\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Author UWAKWE Queendaline Chinyere&nbsp; (Ph.D) Department of Economics&nbsp; Management and Social Sciences Godfrey Okoye University&nbsp; Thinkers Corner&nbsp; Enugu Nigeria. quwakwe@gouni.edu.ng Download PDF Abstract Research Objectives: The study examined the impact of interest rate spread on domestic investment in Nigeria, focusing on the relationship between lending rates, deposit rates, and monetary policy rates. It aimed to determine how variations in interest rate spread affect capital accessibility and overall investment performance in the economy between 1981 and 2024. Methodology: To achieve these [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":3281,"comment_status":"open","ping_status":"0","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20,22,21],"tags":[],"class_list":["post-3357","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-grjesd","category-issue-1","category-volume-1"],"_links":{"self":[{"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/posts\/3357","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/comments?post=3357"}],"version-history":[{"count":1,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/posts\/3357\/revisions"}],"predecessor-version":[{"id":3359,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/posts\/3357\/revisions\/3359"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/media\/3281"}],"wp:attachment":[{"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/media?parent=3357"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/categories?post=3357"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/journals.amssr.org\/grjesd\/wp-json\/wp\/v2\/tags?post=3357"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}