Economic and Financial Review


C.I. Enendu


Central Bank of Nigeria, Research Department


Interest rate, Monetary policy, Financial intermediation, financial liberation


This paper provided empirical evidence on the determinants of interest rate spread in a liberalized financial system for the period 1989-2000, using selected banks in Nigeria. Ex-ante interest rate spread equations were estimated using bank balance sheet and income statement as well as macroeconomic data. The results showed that macroeconomic and monetary policy/financial regulation factors were more important determinants of commercial banks' interest spread than bank level factors, Inflation rate, GDP, .financial deepening, cash reserve requirement, risk premium, treasure bill rate, loan asset quality, liquidity risk and non interest expenses were the most important.factors that affected commercial banks' interest rate spread during the period. The study also provided evidence on the quantitative impact of changes in the independent variables on interest rate spread.

Author Bio

The author is a staff of the Central Bank of Nigeria.





Recommended Citation

Enendu, C.I. (2003). Determinants of commercial bank interest rate spread in a liberalized financial system: empirical evidence from Nigeria (1989-2000). Economic and Financial Review, 41(1), 35-85

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Finance Commons



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