Does Interest Rate Spread Volatility Precipitate Investment in Nigeria?
Andohol, Jerome Terhemba
Department of Economics
Benue State University, Makurdi
Email: torsaa2002@yahoo.com
ABSTRACT
The work sought to investigate the impact of interest rate spread volatility on investment from 1986 to 2014. The investigation was anchored on a theoretical linkage of the Mckinnon -Shaw financial repression theory and the Ho and Saunders dealership theory. The Auto Regressive Conditional Heteroscedasticity Methodology was adopted for this study. The findings suggest that there is high volatility clustering with its persistence attributed to unconditional variance. The study also found out that interest rate spread volatility, does significantly impact on investment in Nigeria. This means activities surrounding the mobilization of savings from depositors and onward lending to investors, should be given due diligence in an effort to minimize interest rate spread which causes uncertainty that impacts negatively on investment and economic growth.
Keywords: Interest rate Spread Volatility, Interest rate Spread, Investment, Economic Growth, Auto Regressive Conditional Heteroscedasticity
