Impact Of Interest Rates On Saving Mobilization In Nigeria

Before the deregulation of interest rates in Nigeria, the current rates of interest were regulated and controlled by government through the Central Bank of Nigeria (CBN). This was meant to guide the economy lo follow the desired direction. However, it was soon realized that (he low rates of interest that prevailed could not sustain savings mobilization in the country. The study thus seeks to empirical!) examine the impact of interest rales on savings mobilization between 1987 and 2014 using Ordinary Least Square (OLS) regression method. Unit root test was employed to lest the stationary levels of the variables before conducting the regression analysis. The stationary variables were subsequently used for the analysis to avoid spurious regression results. The co-integration results showed that long-run equilibrium relationship exist among the variables used for the analysis. The findings from the study showed that interest rate on savings have positive and significant relationship with saving mobilization in Nigeria. It showed that the higher the interest rates, the higher the savings mobilization in Nigeria. Suggestive from the analysis therefore is that the monetary authorities should embark on routine efforts at bridging the widened gap between interest rates on savings and savings mobilization to foster a moderate rise in nominal interest rates and stabilize inflationary pressure. This would further encourage and generates needed loardable funds for investment in Nigeria.