The Impact Of Interest Rate On Domestic Investment

ABSTRACT

The relationship between interest rate and domestic investment has attracted the attention of economists and other economic experts. This study carried out an empirical analysis of the impact of interest rate on domestic investment in Nigeria covering the period 1980-2016. Data for the research was extracted from the central bank of Nigeria statistical bulletin. The methodology adopted in the research is the multiple linear regression with the application of Ordinary least Squares (OLS) technique. Findings from the study reveal that interest rate has a negative and significant impact on domestic investment in Nigeria, inflation has no significant impact on domestic investment in Nigeria and money supply has no significant impact on domestic Investment in Nigeria.  It is therefore the recommendation for the study that the federal government through the Central Bank should boost the level of domestic investment through an optimal reduction in interest rate and the federal government should ensure a conducive and comfortable macroeconomic atmosphere so that domestic investment can strive.

KEY WORDS : Interest Rate, Domestic Investment, Inflation.