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DOI: ANALYZING THE RELATIONSHIP BETWEEN INTEREST RATE AND EXTERNAL RESERVES IN NIGERIA: A COINTEGRATION APPROACH
Machupa Njoroge , Accounting And Finance Department School Of Business, Kenyatta University, Nairobi KenyaAbstract
Nigeria's economy is heavily reliant on the oil industry, making external reserves and interest rates crucial indicators of economic stability and development. This paper examines the long-term relationship between interest rates and external reserves in Nigeria using cointegration analysis. The study finds a significant long-term relationship between the two variables and suggests that external reserves have a causal relationship with interest rates, indicating that external reserves are a crucial determinant of interest rates in Nigeria. The findings have important implications for policymakers in Nigeria, highlighting the importance of maintaining a stable external reserve to ensure economic stability and growth.
Keywords
Nigeria, interest rate, , external reserves
References
Adetunji, A., &Oyetunji, O. (2017). The Relationship between Interest Rate and Exchange Rate in Nigeria: Evidence from Cointegration and Error Correction Mechanism. Journal of Finance and Accounting, 5(6), 219-226.
Adofu, I., &Okpanachi, J. (2018). External Reserves Management and the Nigerian Economy: An Empirical Analysis. Journal of Applied Economics and Business Research, 8(3), 67-79.
Akpan, E. O., &Atan, J. A. (2019). Interest Rate, External Reserves and Economic Growth in Nigeria: A VAR Analysis. International Journal of Economics, Commerce and Management, 7(10), 143-155.
Alade, S. O., & Adeoye, B. W. (2017). Interest Rate, Exchange Rate and External Reserves Nexus in Nigeria: An Autoregressive Distributed Lag (ARDL) Approach. European Journal of Accounting, Auditing and Finance Research, 5(3), 80-90.
Obadiaru, E. D., & Okorie, U. E. (2020). External Reserves and Interest Rate Nexus in Nigeria: An Empirical Analysis. Journal of Economics and Sustainable Development, 11(6), 43-50.
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