The Determinants of Interest Rate Spreads in Nigeria: An Empirical Investigation

Anthony E. Akinlo, Babatunde Olanrewaju Owoyemi

Department of Economis, Obafemi Awolowo University, Ile-Ife, Nigeria.

DOI: 10.4236/me.2012.37107                

Abstract

The paper examines the determinants of interest rate spreads in Nigeria using a panel of 12 commercial banks for the period 1986-2007. The results suggest that cash reserve requirements, average loans to average total deposits, remuneration to total assets and gross domestic product have positive effect on interest rate spreads. However, non-interest income to average total assets, treasury certificate and development stocks have negative relationship with interest rate spreads. In general, the findings that suggest a reduction in cash reserve ratio, high bank overhead costs amongst others will help to moderate the high interest rate spreads in Nigeria.

Keywords

Interest Rate Spread; Determinants; Nigeria

Conflicts of Interest

The authors declare no conflicts of interest.

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