DO INTEREST RATES AND SAVINGS CAUSE DOMESTIC INVESTMENTS IN DEVELOPING ECONOMIES? MACROFINAMETRIC EVIDENCE FROM NIGERIA

Chinedu B. Ezirim
University of Port Harcourt

Chukwu A. Ejem
Abia State Polytechnics

Udochukwu Ogbonna
Board of Internal Revenue, Abia State Umuahia

Ude Oko Chukwu
Government House, Abia State Umuahia

ABSTRACT

The study revisited the nexus between savings, investments and interest rates, in the
regime of ensuing controversies and inconsistent empirical submissions by various authors, in an
attempt to lie to rest the question of whether or not savings and interest rates constitute major
causal factors of domestic investments in developing countries, such as Nigeria. use was made of
causality, co-integration, and error correction techniques applied to annual time-series Nigerian
data from 1981 through 2017. The result verified the claims of theory that interest rates negatively
and significantly drive investments, while savings positively drive investments remarkably in
developing countries.
Keywords: Savings, investments, interest rates, causality, Nigeria