Real Interest Rate and Investment Nexus: The Case of Ghana

George Asumadu

Real Interest Rate and Investment Nexus: The Case of Ghana

Prof. George Asumadu * § Senior Lecturer, Kumasi Technical University

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§ Kumasi Technical University

Real Interest Rate and Investment Nexus: The Case of Ghana

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Abstract

This study examines variations in interest rate and investment determination in Ghana. The study is necessitated by the fact that previous studies only examined the effect of interest rate on investment determination without assessing the bi-casual relationship between these macroeconomic variables. Investment decision is seen as demand for credit in an economy and this study calculated the annual time series for the period 1990-2014 and examined the determinants of interest rate variation and its impact on investment. Unit roots and co-integration tests were conducted. Data for the study were extracted from the World Development Indicators Database. The study revealed that variation in interest rate played a negative and highly significant role in investment decision in the economy and demand for credit also had negative and significant influence on interest rate variations in both the short run and long run. Although, the study deduced that investment has an indirect relationship with interest rate variation, other variables such as debt burden, economic stability, foreign exchange, shortage and lack of infrastructure affect gross domestic investment. Improvement in these key macro-economic variables is a necessary condition towards promoting investment. The findings and recommendations provide vital information relevant for policy formulation and implementation aimed at boosting investment in Ghana.

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

How to Cite This Article

Prof. George Asumadu. 2018. "Real Interest Rate and Investment Nexus: The Case of Ghana". Global Journal of Management and Business Research - C: Finance GJMBR-C Volume 18 (GJMBR Volume 18 Issue C3).

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GJMBR Volume 18 Issue C3

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Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

Keywords

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Classification

GJMBR-C Classification JEL Code: G11

Submission ReceivedDecember 14, 2017
Peer Review Double Blind
Handling Editor
Accepted January 1, 2018
Published May 31, 2018

Version of record

v1.2

Issue date

May 31, 2018

Language

English

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Article Matrices

Total Score: 102

Country: Ghana

Subject: Global Journal of Management and Business Research - C: Finance

Authors: Daniel Ofori, George Asumadu (PhD/Dr. count: 0)

View Count (all-time): 349

Total Views (Real + Logic): 1097

Total Downloads (simulated): 65

Publish Date: 2018 01, Mon

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