The Impact of Interest Rate on Bank Deposits Evidence from the Nigerian Banking Sector

Abstract

The study investigates the effect of interest rates on customer savings behavior in the Nigerian banking sector, after identifying a host of factors that are likely to influence customer confidence in commercial banks such as average income, commercial lending, legal rights strength, central bank monetary policy and total annual commercial bank losses, using quantile regression estimation method, a non parametric estimation process that is based on the premise that the sample median will tend to that of the distribution and addresses issues of heteroscedastic errors and data stringency associated with the data used in the study under question. We find that interest rates were probably increasing bank deposits while income was also found to affect bank deposits in general