Interest Rate Dynamics and Export Performance in the Nigerian Economy

Abstract

The study comprehensively investigates the relationship between interest rate dynamics and export performance within the Nigerian economy from 1991-2022. The variables for which data were sourced include: Real Interest rate, Export and Exchange rate. The study used cointegration test and Error correction mechanism (ECM) to estimates the data. The findings show that there is a longrun
relationship between Interest rate and Export and Exchange rate in Nigeria. The ECM result shows that there is a negative relationship between interest rate and Export in Nigeria. The study therefore recommends that the Central Bank should introduce targeted financing initiatives, like subsidized loans or interest rate rebates, specifically tailored for export-focused enterprises. This approach
aims to alleviate the burden of high borrowing costs on exporters, potentially mitigating their adverse effects on operations. By reducing the cost of borrowing, this strategy seeks to bolster the competitiveness of exporters in the face of elevated interest rates.