Abstract
This study using regression analysis tried to find connection between lending interest rate and agricultural sector activity in Nigeria for real and nominal values from the beginning of the fourth and current republic (1999) to 2016. Tests showed that interest rate had a strong significant negative relationship with agricultural sector activity. Because interest rate and monetary policy is currently not the main tool used by the federal government to improve this sector this recommended more favorable lending interest rates for farmers and industries to be used in sync with government spending in the agricultural sector as an effective way of improving its performance. Keywords: Interest Rate, Agriculture, Crops, Livestock, Forestry, Fishing, Monetary Policy, Nigeria, Africa. DOI : 10.7176/JEES/9-11-02 Publication date: November 30 th 2019
Highlights
Nigeria’s economy is almost solely reliant on the oil sector
Monetary policy refers to a central bank or federal reserves’ control of interest rate by using money supply and vice versa
A self-adjusting market that relies on a basic relationship. One of such relationships is between interest rate and investment such that when interest is low, there is a greater opportunity for profit and as such investors will pounce on this opportunity to borrow at low interest rates and invest
Summary
Nigeria’s economy is almost solely reliant on the oil sector This has made it prone to fluctuations depending on oil prices and was recently plunged into a recession due to falling oil prices. Monetary policy refers to a central bank or federal reserves’ control of interest rate by using money supply and vice versa. This is achieved through changing interest rates, selling or buying government bonds or changing the reserve ratio. Though a certain level of inflation is healthy and necessary in a growing economy, when it exceeds this level it can cause lower demand in an economy which stunts economic growth and causes unemployment This is why the central bank uses contractionary monetary policy
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