IMPACT OF INTEREST RATE ON CREDIT MANAGEMENT IN MICROFINANCE BANKS IN NIGERIA
Abstract
Abstract
This study examined interest rate and credit management in microfinance banks in Nigeria. The objectives of the study were to determine the effect of interest rate, exchange and inflation rates on profitability of microfinance banks in Nigeria within the period 2011-2024. The study made use of time series data generated from secondary sources of Central Bank of Nigeria. The study also employed OLS multiple regression analytical techniques. The findings reveal that exchange rate fluctuation has significant positive effect on profitability of microfinance banks in Nigeria while interest rate and inflation rate have significant negative effects on profitability of microfinance banks in Nigeria within the period 2011-2024. It is recommended, among others, that since default on loans is linked to high interest rate, microfinance banks should charge a fair and reasonable rate which the short-term borrowers can afford and at same time avoid risk of default in the long-run.
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