Interest Rate Transmission Effect on Money Supply: The Nigerian Experience

Ebiringa, Oforegbunam Thaddeus (Ph. D)

Abstract


This paper investigates the effect of interest indices on money supply. The motivation is to ensure stability in money supply through sustainable interest rate management.  The period 1990-2007 was covered. The Eviews software was used to carry out autoregressive analysis on the variable as well as an assessment of the effects on interest rate indices on money supply. The results among others show that minimum rediscount rate and savings rate have made significant positive impact on money supply. On the other hand, lending rate has made insignificant negative impact on money supply.   Based on the above results the conclusion of the study the inability of the monetary authority to narrow the gap between saving and lending rate remains a key to the problem of instability in money supply, hence concerted effort must by made to strengthen the capacity of regulatory authorities to use market based options monitor and control periodic volatility in money supply through an effective interest rate regimes.


Full Text:

PDF


DOI: http://dx.doi.org/10.5296/jpag.v2i1.1683

Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.

To make sure that you can receive messages from us, please add the 'macrothink.org' domain to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', check your 'bulk mail' or 'junk mail' folders.

Copyright © Macrothink Institute ISSN 2161-7104

'Macrothink Institute' is a trademark of Macrothink Institute, Inc.