Interest Rate Dynamics and Its Impact on the Performance of the Manufacturing Sub-Sector in Nigeria (Published)
The major focus of the research is to empirically investigate the impact of interest rate dynamics on performance of manufacturing- sub sector in Nigeria. The research covers the period between 1980 and 2019. This period is important since it includes the pre-structural adjustment programme (SAP) era where interest rate was not liberalized and the structural adjustment programme period where interest rate is liberalized. The cointegration technique with its implied error correction mechanism was used for the study. The result shows that the high interest rate in Nigeria has hindered the performance of the manufacturing sub sector. The GARCH and ARCH results indicates that interest rate dynamics has influenced the performance of the manufacturing sub- sector. The result also confirms a long run relationship among the variables. It was therefore recommended amongst others, that there should be a drastic reduction in the interest rate coupled with the adoption of liberalized interest rate regime with some caution; this will increase the performance of the manufacturing sub- sector in Nigeria.
Keywords: Minimum rediscount rate, Monetary Policy Rate., Treasury Bills, and inflationary spiral., manufacturing sub-sector