LENDING RATES AND DOMESTIC INVESTMENT IN NIGERIA (1981-2023)

The study investigated Lending Rate and Domestic Investment in Nigeria (1981-2023) using secondary data from Central Bank of Nigeria Statistical Bulletin, World Development Indicator (WDI), and National Bureau of Statistics (NBS). The objectives of this study were to describe the trends of Lending Rate and Domestic Investment, determined the impact of Lending Rate on Domestic Investment and causal relationship between Lending Rate and Domestic Investment. Unit root test was carried out with the use of Augmented Dickey Fuller to ascertain the stationarity of the variables and they were found to be stationary at order I (0) and I (1). ARDL (Autoregressive distributed lag) bound test was used to analyze the model as there existed no long run co-integration among the variables. The granger causality test was used to test for the causality among the variables in the model as well as checked the direction of causality among variables. The study concluded that total domestic investment in previous years has influence on its current Value. More so, Inflation rate and the public and private sector credits also have effect on total domestic investment in Nigeria during the period of the study. The study therefore recommends the Interest rates should be adjusted by the Central Bank of Nigeria (CBN) to prevent price increases and to deter new investments in machinery and plants.