MONEY SUPPLY VARIABILITY AND INTEREST RATE SPREAD IN DEVELOPING ECONOMIES: THE CASE OF NIGERIA

Abstract

This paper applies cointegration technique to investigate the long‐run equilibrium relationship between money supply variability and interest rate spread in Nigeria subsequent to the introduction of a structural adjustment program. The results imply no long‐run equilibrium relationship between money growth variability and interest rate spread between 1985 and 1992. Furthermore, we found evidence from the Pairwise Granger Causality test that supports Friedman's hypothesis that money growth variability impacts the term structure of interest rates. These results have implications for developing economies, especially those that share characteristics similar to Nigeria's.

Citation

Gbenedio, P., Felix Ayadi, O. and Okpala, A. (1999), "MONEY SUPPLY VARIABILITY AND INTEREST RATE SPREAD IN DEVELOPING ECONOMIES: THE CASE OF NIGERIA", International Journal of Commerce and Management, Vol. 9 No. 1/2, pp. 35-44. https://doi.org/10.1108/eb047381