Effect of Interest Rate Deregulation on the Nigerian Economy

The theory of interest rate and it''s management has remained topical in finance and economic literature. It was observed in Nigeria that there is a misalignment of the various interest rates which has perennially led to the widening gap between deposit and lending rates. This led to the introduction of the interest rate regime that is narrowed within preset percentages. This study investigates the casual relationship between interest rate deregulation and the growth of the Nigerian economy. The study adopted the ex-post facto research design and the Ordinary Least Square Regression technique for analysis. It also used annual time series data for 26 years period 1987-2013 collated from the Central Bank of Nigeria statistical bulletins and National Bureau of Statistics. The research findings revealed that interest rate deregulation had a positive and significant effect on the Nigerian economy.