The Influence of Interest Rates Dynamics on Financial Deepening in Nigeria

Abstract

Examining how interest rate reforms affect Nigeria's financial deepening is the paper's primary goal. The Co integration, Error Correction Model (ECM), and Ordinary Least Square (OLS) techniques as estimate methods were adopted. In this study, time series data from 1990 to 2020 are examined. The findings suggest that interest rates and financial deepening have a long-term relationship. We also discover that the interest rate reform has a favorable and considerable impact on Nigeria's financial deepening. The findings point to the need for policy makers to implement policies that support financial development, economic growth, the liquidity reserve ratio, the domestic savings/GDP ratio, and reforms to ensure the efficiency and development of the financial system.

Keywords: interest rates, financial deepening and economic growth

DOI: 10.7176/JESD/13-13-04

Publication date:July 31^st 2022