Select Currency
Translate this page

THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY

Format: MS WORD  |  Chapter: 1-5  |  Pages: 53  |  6925 Users found this project useful  |  Price NGN5,000

  DOWNLOAD THE FULL PROJECT

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OTO THE STUDY

The Central Bank of Nigeria is responsible for implementing monetary policy, regulating and supervising banks, and operating the payments system. With these responsibilities come the authority to raise and lower national interest rates in the banking industry. Interest rate movements help balance inflation and keep the economy stable. When the economy slows and inflation is high, the CBN raises interest rates to change consumer behavior   Interest has been variously defined both by conventional economists and Islamic economists. In conventional economic interest rate refers to that surplus income that is positive which a lender receives from the borrower over and above, the principal amount, as a reward for waiting or parting with the liquid part of his capital for a specified period of time.

Given the prominent role of the banking sector in the euro area’s financial system, it is of significant importance for the ECB to monitor the degree of competitive behaviour in the euro area banking market. A more competitive banking market is expected to drive down bank loan rates, adding to the welfare of households and enterprises. Further, in a more competitive market, changes in the ECB’s main policy rates supposedly will be more effectively passed through to bank interest rates.   This study extends the existing empirical evidence, which suggests that the degree of bank competition may have a significant effect on both the level of bank rates and on the pass-through of market rates to bank interest rates. Understanding this pass-through mechanism is crucial for central banks. However,most studies that analyse the relationship between competition and banks’ pricing behaviour apply a concentration index such as the Herfindahl-Hirschman index (HHI) as a measure of competition. We question the suitability of such indices as measures to capture competition. Where the traditional interpretation is that concentration erodes competition, concentration and competition may instead increase simultaneously when competition forces consolidation. For example, in a market where inefficient firms are taken over by efficient companies, competition may strengthen, while the market’s concentration increases at the same time. In addition, the HHI suffers from a serious weakness in that it does not distinguish between small and large countries. In small countries, the concentration ratio is likely to be higher, precisely because the economy is small.

The main contribution of this paper is that it applies a new measure for competition, called the Booneindicator (see also Boone, 2001; Bikker and Van Leuvensteijn, 2008; Van Leuvensteijn et al., 2007).The basic notion underlying this indicator is that in a competitive market, more efficient companies are likely to gain market share. Hence, the stronger the impact of efficiency on market shares is, the stronger is competition. Further, by analyzing how this efficiency-market share relationship changes over time, this approach provides a measure which can be employed to assess how changes in competition affect the cost of borrowing for both households and enterprises, and how it affects the pass-through of policy rates into loan and deposit rates.Our study contributes also to the pass-through literature in the sense that it applies a newly-constructed data set on bank interest rates for eight euro area countries covering the January 1994 to March 2006 period.

This paper uses interest rate data that cover a longer period and that are based on more harmonized principles than those used by previous pass-through studies for the euro area. We find that stronger competition implies significantly lower interest rate spreads for most loan market products, as we expected. Using an error correction model (ECM) approach to measure the effect of competition on the pass-through of market rates to bank interest rates, we likewise find that banks tend to price their loans more in accordance with the market in countries where competitive pressures are stronger.Furthermore, where loan market competition is stronger, we observe larger spreads between bank and market interest rates (that is, lower bank interest rates) on current account and time deposits. Lower time deposit rates in countries with stronger bank competition are confirmed by the ECM estimates. Apparently, the competitive pressure is heavier in the loan market than in the deposit markets, so that banks under competition compensate for their reduction in loan market income by lowering their deposit rates. Furthermore, in more competitive markets, bank interest rates appear to respond morestrongly and sometime more rapidly to changes in market interest rates.

1.2     STATEMENT OF PROBLEM

The fundamental problem of any government vogue is its economic or otherwise its implementation. a number of government monetary policy instruments have been designed and applied in Nigeria in the hope of achieving the desired result of stable price level, low level of unemployment, efficient banking system etc. but the applications of direct monetary instruments have not bring forth the desired objectives stated above hence, left the government without any other alternative than to turn to the direct monetary instrument.Therefore, the problem under study is the impact of rising interest rate on manufacturing sector. One of the principal function of the central bank of Nigeria (CBN) is to formulate and execute monetary policy to promote stability and soundfinancial system in Nigeria.Monetary policy was adopted when strategy shifted to demand management containing inflation preseure, balance of payment, imbalance and high deflect in the federal budget and the effect on the growth in money supply. Consistent with the monetary targeting problems of the Central Bank of Nigeria (CBN) focuses on liquidity management to achieve the objective by maintaining price and macro economic stability.Despite all these efforts that put are in place by Central Bank of Nigeria, the problem of monetary management have persisted and the main constraints continue to be the ineffective control and the uncertainty created by fiscal operation.

1.3     OBJECTIVE OF THE STUDY

Ø To identify if loan interest rates are lower, and deposit interest rates higher, in more competitive loan markets than in less competitive loan markets

Ø To assess long-run loan and deposit interest rate responses to corresponding market rates are stronger in more competitive loan markets than in less competitive loan markets

Ø To identify bank interest rates in more competitive markets adjust faster to changes in market interest rates than in less competitive markets

1.4     RESEARCH QUESTION

i.  How does interest rates are lower, and deposit interest rates higher, in more competitive loan markets than in less competitive loan markets?

ii.  How does long-run loan and deposit interest rate responses to corresponding market rates are stronger in more competitive loan markets than in less competitive loan markets?

iii.      Is bank interest rates in more competitive markets adjust faster to changes in market interest rates than in less competitive markets?

1.5     SIGNIFICANCE OF THE STUDY

However, the research study will assist the economic to derive possible solution to the problem e.g. inflation using policies measures as adopted by the monetary authorities. Further, the research, x-rays that types of monetary policy measure which can be use to combat the problem of unstable economic and as a result will be a kind of it may be concerning of their field of study. Government will benefit immensely on the research work as the research have put it down.  

1.6     SCOPE OF THE STUDY

This project covers the impact of rising interest rate on manufacturing. A general overview of monetary policy and inflation in the Nigerian economy is the foundation upon which the project is developed.

1.7     LIMITATION OF THE STUDY

However, study of this nature is known to be subject to a number of problems or constrains, which are peculiar to the Nigerian society such as financial constraints. This research work was not an exception the problem of visiting the Central Bank of Nigerian and some other places for data collection involved spending a lot of money or transport expenses. Hence, the predicament of the overage students can therefore be imagined. Furthermore, the issue of office protocols time limit, secrecy inadequate research materials also were some setbacks to the researchers in carrying out this research.

1.8     DEFINITION OF TERMS

The author considers it necessary to define the following terms as applied within the context of this project.

Asset portfolio: Arrangement of bank assets on order of its liquidity and profitability.

Advances: These are monies lent by a bank generally in the form of an overdraft on a current account and also by means of a loan or personal loan.
Affidavit form: This is a written statement used as a legal proof.

Bank credit: Credit created by a bank increasing the size of the account of a depositor e.g. when making an advance.

Branch banking: the typical commercial bank in most countries is a very large institution with a large number of branches.

C.O.T:  Commission on turn over or cost of transaction, this is normally charged on the total of debt turn over of current account.

C.O.F.O:  Certificate of occupancy Cash ratio:  This is the ratio of cash to demand deposit usually calculated on percentage. 
Clean lending: Loan and advance granted without any security. 
Collateral security: properties perhaps in the firming deeds to a house or stock and shares deposited with a creditors to guarantee that a loan will be repaid.

Demand deposit: this is the total amount of money deposited with the bank.

Deed of release: this is the document usually signed by customers when any property held by bank is returned.

Equitable mortgage: Property pledged to the bank as security without legal backing.

  DOWNLOAD THE FULL PROJECT

THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY

Not The Topic You Are Looking For?



For Quick Help Chat with Us Now!

+234 813 292 6373

+233 55 397 8005


HOW TO GET THE COMPLETE PROJECT ON THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY INSTANTLY

  • Click on the Download Button above.
  • Select any option to get the complete project immediately.
  • Chat with Our Instant Help Desk on +234 813 292 6373 for further assistance.
  • All projects on our website are well researched by professionals with high level of professionalism.

Here's what our amazing customers are saying

Samuel From Ajayi Crowther University
You guys just made life easier for students. Thanks alot iprojectmaster.com
Excellent
Azeez Abiodun
Moshood Abiola polytechnic
I actually googled and saw about iproject master, copied the number and contacted them through WhatsApp to ask for the availability of the material and to my luck they have it. So there was a delay with the project due to the covid19 pandemic. I was really scared before making the payment cause I’ve been scammed twice, they attended so well to me and that made me trust the process and made the payment and provided them with proof, I got my material in less than 10minutes
Very Good
Abdulrazak Bello Marsha
Usman Dan fodio University
It was quite a better guide for project and paper presentation purpoting. Many thanks.
Average
Stancy M
Abia State University, Uturu
I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much iprojectmaster, infact, I owe my graduating well today to you guys...
Excellent
Ibrahim Muhammad Muhammad
Usmanu danfodiyo university, sokoto
It's a site that give researcher student's to gain access work,easier,affordable and understandable. I appreciate the iproject master teams for making my project work fast and available .I will surely,recommend this site to my friends.thanks a lot..!
Excellent
Abdulrahman Jibrin
Nti Abaji
Nice one work prompt delivery tanx
Very Good
Dau Mohammed Kabiru
Kaduna State College of Education Gidan Waya
This is my first time..Your service is superb. But because I was pressed for time, I became jittery when I did not receive feedbackd. I will do more business with you and I will recommend you to my friends. Thank you.
Very Good
Abdul Mateen Iddrisu
UDS
At first I taught is a site full of fraudsters until I saw my project in my Gmail after my payment.. THANK YOU IPROJECTMASTER and May God the almighty bless u guys abundantly
Excellent
MATTHEW NGBEDE
Ahmadu Bello University
I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!
Excellent
JONNAH EHIS
Ajayi Crowther University, Oyo
I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!
Excellent

FREQUENTLY ASKED QUESTIONS

How do I get this complete project on THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY?

Simply click on the Download button above and follow the procedure stated.

I have a fresh topic that is not on your website. How do I go about it?

How fast can I get this complete project on THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY?

Within 15 minutes if you want this exact project topic without adjustment

Is it a complete research project or just materials?

It is a Complete Research Project i.e Chapters 1-5, Abstract, Table of Contents, Full References, Questionnaires / Secondary Data

What if I want to change the case study for THE IMPACT OF RISING INTEREST RATE ON MANUFACTURING SECTOR OF THE NIGERIAN ECONOMY, What do i do?

Chat with Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

How will I get my complete project?

Your Complete Project Material will be sent to your Email Address in Ms Word document format

Can I get my Complete Project through WhatsApp?

Yes! We can send your Complete Research Project to your WhatsApp Number

What if my Project Supervisor made some changes to a topic i picked from your website?

Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

Do you assist students with Assignment and Project Proposal?

Yes! Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

What if i do not have any project topic idea at all?

Smiles! We've Got You Covered. Chat with us on WhatsApp Now to Get Instant Help: +234 813 292 6373

How can i trust this site?

We are well aware of fraudulent activities that have been happening on the internet. It is regrettable, but hopefully declining. However, we wish to reinstate to our esteemed clients that we are genuine and duly registered with the Corporate Affairs Commission as "PRIMEDGE TECHNOLOGY". This site runs on Secure Sockets Layer (SSL), therefore all transactions on this site are HIGHLY secure and safe!