Interest Rate Volatility and Economic Growth in Nigeria: New Insight from the Quantile Autoregressive Distributed Lag (QARDL) Model

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dc.contributor.authorOlasehinde-Williams, Godwin
dc.contributor.authorOmotosho, Ruth
dc.contributor.authorBekun, Festus Victor
dc.date.accessioned2024-04-22T12:21:24Z
dc.date.available2024-04-22T12:21:24Z
dc.date.issued2024en_US
dc.departmentFakülteler, İşletme Fakültesi, Yönetim Bilişim Sistemleri (İngilizce) Bölümüen_US
dc.description.abstractThis is a study on interest rate volatility, a crucial form of volatility which affects local and foreign investments in the real and financial sectors. Whether to prioritize interest rate stability to prevent distortions in the market mechanism or to prioritize other macroeconomic objectives while allowing interest rates to independently react to market forces is a key question for Nigeria’s apex monetary authority. Answering this question is the primary motivation for this research. This paper is an attempt to establish the effect of interest rate volatility on economic growth and further conclude on the suitability of the financial liberalization policy in Nigeria. To reach an evidence-based conclusion, the paper analyzes the relationship between interest rate volatility and economic growth in Nigeria for the period 1981–2020. The QARDL procedure was employed to establish the short-run and long-run quantile-specific impacts of interest rate volatility. As a final step, Granger causality tests are conducted to investigate the predictive powers of the variables. It is discovered from the econometric analysis that interest rate volatility adversely affects the economic performance of Nigeria in both the short run and long run. Consequently, full liberalization is not suitable for the economy. Moreover, we find that the short-run adverse growth effect of interest rate volatility is greater when the economy is already in a relatively weak state, whereas the long-run adverse growth effect is greater when the economy is already in a relatively strong position. The findings sufficiently prove that full interest rate liberalization is not Pareto efficient for Nigeria. Hence, greater supervision of the interest rate corridor system to reduce volatility in the rates and minimize chances of persistent upward or downward bias is advised. Study limitations and directions for further research are also provided.en_US
dc.identifier.doi10.1007/s13132-024-01924-xen_US
dc.identifier.scopus2-s2.0-85189910623en_US
dc.identifier.scopusqualityN/Aen_US
dc.identifier.urihttps://hdl.handle.net/11467/7249
dc.identifier.urihttps://doi.org/10.1007/s13132-024-01924-x
dc.identifier.wosWOS:001199088300001en_US
dc.identifier.wosqualityN/Aen_US
dc.indekslendigikaynakWeb of Scienceen_US
dc.indekslendigikaynakScopusen_US
dc.language.isoenen_US
dc.publisherJournal of the Knowledge Economyen_US
dc.relation.ispartofJournal of the Knowledge Economyen_US
dc.relation.publicationcategoryMakale - Uluslararası Hakemli Dergi - Kurum Öğretim Elemanıen_US
dc.rightsinfo:eu-repo/semantics/openAccessen_US
dc.subjectInterest rate; Volatility; Liberalization; Repression; Economic growth; Nigeriaen_US
dc.titleInterest Rate Volatility and Economic Growth in Nigeria: New Insight from the Quantile Autoregressive Distributed Lag (QARDL) Modelen_US
dc.typeArticleen_US

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