ABSTRACT

The study investigates empirically the impact ofinterest rate on manufacturing sector output of the Nigerian economy. The broad objective ofthis study is; to determine the impact ofinterest rate on manufacturing sector output ofNigerian economy. Annual data on manufacturing sector output, inflation rate, commercial banks total loan volume and interest ratefrom the Central Bank of Nigeria statistical bulletin and Index Mundi covering the period 1980 - 2017 were utilized. A model was constructed to incorporate manufacturing sector output as dependent variable, and commercial banks total loan volume, inflation rate and interest rate as the independent variables and tested using the Ordinary least Square (OLS) Methods. However, the result showed positive and insignificant relationship between interest rate and manufacturing sector performance in Nigeria during the period covered while interest rate had negative impact on manufacturing sector output ofNigeria. Since interest rate is not the only factor affecting the manufacturing sector performance in Nigeria, the study recommends that government should provide the essential infrastructural facilities especially electricity supply. Government should be consistent with policies that will bring about sustainable growth in the manufacturing sector and this can only work with proper synergy with stakeholders. There should be an effective economic policy to ensure that inflation rate is kept at minimum level. Effort should be made to ensure that lending interest rate to the real sector ofthe economy is kept at affordable level that would encourage investment and all which will increase manufacturing sector productivity.