Impact of Interest Rate Spread on Savings in Nigeria

An Empirical Investigation

Abstract

This paper investigated the impact of interest rate spread on savings in Nigeria for the period, 1981-2019. The study argued that interest rate spread is a major determinant of saving behaviour in Nigeria. The study employs the ordinary least square models for the estimates using the multiple regression analysis. The study tested for unit root where savings and interest rate are integrated. The study also used the Johenson co-integration test to confirm the long-run relationship among the variables. The result of the study shows that interest rate spread and exchange rate, inflation, savings, interest, and GDP growth rate are statistically insignificant. The study concluded and recommended that the Central Bank of Nigeria (CBN) should put in place measures to monitor interest rate spread related measures such as; deposit rate, operating efficiency, liquidity risk and gross domestic rate while strengthening collaboration with financial institutions to put appropriate policies and strategies in place to reduce bank lending rate in other to boost financial performance in Nigeria.