IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 2 NO. 1 2016

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Effects of Financial Reforms on Economic Empowerment in Nigeria

Maryann N. Igbodika, Jessie I. Chukwunulu

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Abstract

This study investigated the effect of interest rate deregulation on economic empowerment of Nigerians. In 1986, the Nigerian economy was liberalised to allow market forces to determine cost of funds and give competitive advantage over investible capital to the most efficient productive unit. How well this policy has engendered economic empowerment has remained issue of interest to researchers and policy makers. The study used prime lending, savings and monetary policy rate as the explanatory variables of interest rate deregulation and per capita income to proxy for economic empowerment for a time frame covering 1987 to2014. The OLS regression was employed for the analysis. The result indicated that only 10.4% of economic empowerment is explained by interest rate deregulation, thus, the policy has not engendered economic empowerment in Nigeria. Prime lending rate has positive but insignificant effect on economic empowerment. More so, savings rate and monetary policy rate have negative and insignificant effect on economic empowerment in Nigeria. The study further found that monetary policy rate has the highest and major contribution to the model which suggests that monetary policy rate is the anchor of the interest rate deregulation in Nigeria. The study thus concludes that interest rate deregulation policy has not facilitated economic empowerment in Nigeria

keywords:

Interest rate deregulation, monetary policy rate, economic empowerment, Nigeria

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