Domestic Interest Rate and Capital Inflows Policy in Nigeria
The implementation of sterilization policy has been noted to raise domestic interest rates as it is designed to lower money supply. This occurs due to the inverse relationship between money supply and interest rates, with a rise in interest rates attracting additional inflows into the economy, putt...
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| Format: | Article |
| Language: | English |
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SGH Warsaw School of Economics, Collegium of Economic Analysis
2024-12-01
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| Series: | Econometric Research in Finance |
| Subjects: | |
| Online Access: | https://www.erfin.org/journal/index.php/erfin/article/view/200 |
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| author | Innocent Chile Nzeh Uche Collins Nwogwugwu Maria Chinecherem Uzonwanne Chika Priscilla Imoagwu Edwin Udochukwu Nwachukwu |
| author_facet | Innocent Chile Nzeh Uche Collins Nwogwugwu Maria Chinecherem Uzonwanne Chika Priscilla Imoagwu Edwin Udochukwu Nwachukwu |
| author_sort | Innocent Chile Nzeh |
| collection | DOAJ |
| description |
The implementation of sterilization policy has been noted to raise domestic interest rates as it is designed to lower money supply. This occurs due to the inverse relationship between money supply and interest rates, with a rise in interest rates attracting additional inflows into the economy, putting pressure on monetary authorities. The verification of this hypothesis in the Nigerian context formed the motivation for this study. The main purpose of this study is to investigate whether sterilization policy actually raises domestic interest rates in Nigeria. Using a monthly dataset from 2010M1 to 2021M3 and the ARDL estimation technique, total sterilization serves as a proxy for sterilization policy, while the treasury bills rate proxies the domestic interest rate. Findings reveal that sterilization policy has a positive and significant impact on domestic interest rates in both the short-run and long-run. Additionally, money supply negatively affects domestic interest rates in the short-run, while world interest rates have a negative and significant impact on domestic rates in both the short and long runs.
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| format | Article |
| id | doaj-art-4daf4d15a38d477fb73ce7c52aef8fa1 |
| institution | Kabale University |
| issn | 2451-1935 2451-2370 |
| language | English |
| publishDate | 2024-12-01 |
| publisher | SGH Warsaw School of Economics, Collegium of Economic Analysis |
| record_format | Article |
| series | Econometric Research in Finance |
| spelling | doaj-art-4daf4d15a38d477fb73ce7c52aef8fa12025-01-13T04:34:12ZengSGH Warsaw School of Economics, Collegium of Economic AnalysisEconometric Research in Finance2451-19352451-23702024-12-019110.33119/ERFIN.2024.9.1.1Domestic Interest Rate and Capital Inflows Policy in NigeriaInnocent Chile Nzeh0Uche Collins Nwogwugwu1Maria Chinecherem Uzonwanne2Chika Priscilla Imoagwu3Edwin Udochukwu Nwachukwu4University of Agriculture and Environmental Sciences (UAES) Umuagwo, NigeriaNnamdi Azikiwe University, NigeriaNnamdi Azikiwe University, NigeriaNnamdi Azikiwe University, NigeriaNnamdi Azikiwe University, Nigeria The implementation of sterilization policy has been noted to raise domestic interest rates as it is designed to lower money supply. This occurs due to the inverse relationship between money supply and interest rates, with a rise in interest rates attracting additional inflows into the economy, putting pressure on monetary authorities. The verification of this hypothesis in the Nigerian context formed the motivation for this study. The main purpose of this study is to investigate whether sterilization policy actually raises domestic interest rates in Nigeria. Using a monthly dataset from 2010M1 to 2021M3 and the ARDL estimation technique, total sterilization serves as a proxy for sterilization policy, while the treasury bills rate proxies the domestic interest rate. Findings reveal that sterilization policy has a positive and significant impact on domestic interest rates in both the short-run and long-run. Additionally, money supply negatively affects domestic interest rates in the short-run, while world interest rates have a negative and significant impact on domestic rates in both the short and long runs. https://www.erfin.org/journal/index.php/erfin/article/view/200SterilizationCapital InflowsMonetary PolicyInterest Rate |
| spellingShingle | Innocent Chile Nzeh Uche Collins Nwogwugwu Maria Chinecherem Uzonwanne Chika Priscilla Imoagwu Edwin Udochukwu Nwachukwu Domestic Interest Rate and Capital Inflows Policy in Nigeria Econometric Research in Finance Sterilization Capital Inflows Monetary Policy Interest Rate |
| title | Domestic Interest Rate and Capital Inflows Policy in Nigeria |
| title_full | Domestic Interest Rate and Capital Inflows Policy in Nigeria |
| title_fullStr | Domestic Interest Rate and Capital Inflows Policy in Nigeria |
| title_full_unstemmed | Domestic Interest Rate and Capital Inflows Policy in Nigeria |
| title_short | Domestic Interest Rate and Capital Inflows Policy in Nigeria |
| title_sort | domestic interest rate and capital inflows policy in nigeria |
| topic | Sterilization Capital Inflows Monetary Policy Interest Rate |
| url | https://www.erfin.org/journal/index.php/erfin/article/view/200 |
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