Impact Analysis of Interest Rate on the Net Assets of Multinational Businesses in Nigeria

Abstract

The purpose for this research was to examine the relationship between interest rate and Net assets of Multinational Companies. It examined the impact of interest rate on net assets of multinational companies in Nigeria from 1995 - 2010. The population was made up of Sixty three companies selected according to market capitalization. A random sampling technique was used of which Seven Companies were selected as sample. The Net assets were represented by Net Assets Value Index in the model which is NAVI = a + b INT + U. A regression model was designed to test the relationship between the net assets and interest rate as a macroeconomic factor. The regression analysis showed that an increase in interest rate results in reduction in net assets. Therefore interest rate and net asset convey information about profitability, the right debt-equity mix which would allow management to take advantage and remain competitive.

Keywords: Interest rate, net assets, multinational businesses, macroeconomic factor, market capitalization.