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Causes of Interest Rate Volatility in Nigeria

Author

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  • Wehnam Peter Dabale
  • Nelson Jagero

Abstract

This paper analyzed the causes of interest rate volatility in Nigeria for the period between January 2000 and December 2005 using an econometric model. The empirical analysis starts by analyzing the series properties of the data which is followed examining the nature of causality amongst the variable using the SPSS version 17 software packages. The results from the study indicated that interest rate exerted significant negative effects on the money supply and the required reserved ratio during the period. 10% decrease in Interest Rate will increase money supply by 4.09% and 10% decrease in interest rate will increase the required reserved ratio by 1.01%. In addition, the study recommended the diversification of the Nigerian economy by investing in other sectors of the economy and the empowerment the Federal Inland Revenue Services in prosecuting tax evaders and improvement on tax collection mechanisms to minimize tax evasion.

Suggested Citation

  • Wehnam Peter Dabale & Nelson Jagero, 2013. "Causes of Interest Rate Volatility in Nigeria," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 1(1), pages 42-47.
    • Handle: RePEc:rss:jnljfe:v1i1p5
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    References listed on IDEAS

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    1. Simeon Ibi Ajayi, 1977. "Some Empirical Evidence on the Demand for Money in Nigeria," The American Economist, Sage Publications, vol. 21(1), pages 51-54, March.
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    Cited by:

    1. Rajmund Mirdala, 2015. "Interest rates and structural shocks in European transition economies," Business and Economic Horizons (BEH), Prague Development Center, vol. 10(4), pages 305-319, January.
    2. Emel Siklar & Ilyas Siklar, 2021. "Time Series Dynamics of Short Term Interest Rates in Turkey," Business and Economic Research, Macrothink Institute, vol. 11(1), pages 92-108, March.

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