ABSTRACT

The rate of growth ofthe Nigerian economy cannot be fully examined without a closer look at the contribution ofcapitalformation to Nigeria's economic growth. This is in the understanding that capitalformation has been recognized as an importantfactor that determines the growth of any economy. However, based on the above, the research seeks to impact ofcapitalformation on economic growth in Nigeria. In analyzing the above research, the researcher adopted the following objectives; examining the effect ofcapitalformation on Real Gross Domestic Product in Nigeria, examining the impact ofinterest rate on Real Gross Domestic Product in Nigeria. Thus, research questions and research hypotheses were structured in accordance with the specific objectives. In a bid to achieve a meaningful research, this research reviewed related literatures on capital formation and economic growth. However, in the quest to perfect this research; ex-post facto research design was adopted. Thus, the data gathered were analyzed using multiple regression of the OLS econometric technique. The analysis however made the followingfindings; that Interest rate has no significant impact on grossfixed capitalformation in Nigeria, that grossfixed capitalformation had a positive and significant relationship with GDP. Based on the findings and conclusion, the research made the following recommendations; that government policy makers should come up with soundfiscal policies that would ensure low rate of interest in order to encourage investment and industrial growth in the country, and finally Commercial banks should make the conditions for lending money easy so as to motivate entrepreneursfrom lending capital to boost their businesses.