Okolo Chimaobi Valentine
Interest Rate Fluctuation Effect on Commercial Bank’s Fixed Fund Deposit in Nigeria
2152 - 2156
2015
9
6
International Journal of Economics and Management Engineering
https://publications.waset.org/pdf/10002257
https://publications.waset.org/vol/102
World Academy of Science, Engineering and Technology
Commercial banks in Nigeria adopted many strategies
to attract fresh deposits including the use of high deposit rate.
However, pricing of banking services moved in favor of the banks at
the expense of customers, resulting in their seeking other investment
alternatives rather than saving their money in the bank. Both deposit
and lending rates were greatly influenced by the Central Bank of
Nigeria (CBN) decision on interest rate. Therefore, commercial bank
effort to attract deposits via manipulation of her rates was greatly
limited, otherwise the banks will be giving out more than it earned.
The study aimed at examining the relationship between interest rate
and fixed fund deposit of commercial banks, how policycontrolled
interest rate affected commercial bank’s fixed fund deposit The
researcher employed ordinary least square technique, using, multiple
linear regression, unrestricted vector autoregression, correlation
matrix test, granger causality and impulse response graph in the
analysis. Commercial bank’s interest rates affected commercial
bank’s fixed fund deposit significantly while policycontrolled
interest rate did not significantly transmit through the commercial
bank’s interest rates to affect fixed fund deposit. While commercial
banks seek creative ways to expand their fixed fund deposit, policy
authorities in Nigeria should better coordinate interest rate fluctuation
and induce competition in the entire financial sector.
Open Science Index 102, 2015