Analysis of Interest Rate Determination and Its Effect on Economic Growth in Nigeria (1990-2017) (Published)
The study examined the analysis of interest rate determination and its effect on economic growth in Nigeria; for the period 1990-2017. Secondary data were used and sourced from Central Bank of Nigeria Statistical Bulletin. The study employed Gross Domestic Product as proxy for Economic Growth and used as the dependent variable; whereas, prime lending rate (interest rate), inflation and private domestic investment were used as explanatory variables to measure interest rate. Hypotheses were formulated and tested using Ordinary Least Square econometrics models. Private domestic investment had a significant effect on Gross Domestic Product in Nigeria. Inflation had an insignificant effect on Gross Domestic Product in Nigeria. Interest rate had an inverse significant effect on Gross Domestic Product in Nigeria. The coefficient of determination indicates that about 65% of the variations in economic growth can be explained by changes in commercial bank lending variables in Nigeria. The study concluded that interest rate had an insignificant effect on economic growth in Nigeria. The study recommended that Government and policy makers should focus on maintaining inflation at a low rate (single digit) and ensure that the rate is stable; this will take care of the problem of inflation on the economy. CBN should increase their surveillance on the commercial banks; in order to address the issue of arbitrarily increase of the lending rate. Government should provide healthy environment for the banks in the industry so as to render efficient financial services to the economy.
Keywords: Analysis, Determination, Economic, Growth, Interest Rate, Nigeria
A Critical Analysis of Financial Performance of Agricultural Development Bank (Adb, Ghana) (Published)
Until recently, many of the banks in developing countries were state owned or locally established with varied mandates to focus on different sectors of the economy. Some of these state banks are bedevilled with peculiar set of challenges making some of them inefficient and unprofitable and in some instances insolvent. Financial performance analysis is aimed at keeping the banks in checks by highlighting low and high performance areas with the understanding that it will bring about improvement in performance. The PELARI (Profitability, Efficiency, Liquidity, Asset Quality, Risk Measures and Investor analyses) model was developed for analysis by the researchers which is similar to the CAMELS’ rating. Financial ratio analysis is employed in the analysis. Troubled signals models such as the Altman z-score for non-manufacturing companies and risk index were also used to measure risk. The Altman z-score generated for 2011 and 2012 showed a figure of less than 1.1 which put the bank in the distress zone category. It was evident from the analysis that ADB’s focus on agricultural financing is diminishing since a sector analysis of loans and advances indicates that the agriculture sector lost its first position to the services sector which recorded 38% compared with agriculture 29% in 2012. The bank’s liquidity showed a downward trend and slipped further down in 2010 confirming the Ghana Banking Survey (2011) assessment that the bank is illiquid.
Keywords: Analysis, Bank, Development, Financial Performance, Liquidity