Effect of Foreign Direct Investment on Interest Rate Regimes in Nigeria

Abstract

Foreign direct investment (FDI) is an important tool for the growth of any economy. FDI is low in Nigeria and this is resulting in low level of economic growth and standards of living and has hindered the promotion of economic prosperity and sustainable development in the country. However, interest rates are critical determinant of foreign direct investment. Traditionally investors will shop for low cost credit sources or lower interest rates and invest it economies that are promising higher returns. The study seeks to examine the effect of foreign direct investment on interest rate regimes in Nigeria. The descriptive research design and multiple linear regression model were used in analyzing the secondary data. The secondary data were sourced from the Central Bank of Nigeria (CBN) website and Nigerian Bureau of Statistics (NBS) several publications The result shows a negative relationship between Foreign Direct Investment and Interest Rate. In conclusion policy maker are to regulate the interest rates prevailing in the country bearing in mind that they influence FDI inflows in the country.