Interest Rate, Economic Growth Rate and Business Profitability of Listed Manufacturing Firms in Nigeria

Abstract

This study examined the effect of interest rate and economic growth rate on business profitability of listed manufacturing firms in Nigeria from 2015 to 2024, using return on asset (ROA) as proxy for business profitability while interest rate and gross domestic growth rate were used as proxies for the macroeconomic factors. The study utilized an ex-post facto research design. Time series data were sourced from the Central Bank of Nigeria (CBN) statistical bulletin and annual audited report of the sampled companies. The population of the study consists of all the 20 industrial goods and healthcare manufacturing firms listed on the Nigerian Exchange Group floor as of 31st December 2024, while 13 companies were selected as sample size using purposeful sampling techniques. Ordinary Least Square Regression Analysis was applied in hypotheses testing with the aid of SPSS version 20.0. The findings revealed that interest rate (INTR) and gross domestic product growth rates (GDPGR) have no significant effect on the return on asset of selected listed manufacturing firms in Nigeria. The study concluded that, macroeconomic factors understudy has insignificant and negative effects on the business profitability of industrial goods and healthcare manufacturing firms in Nigeria. Based on the findings it is recommended that the cost of lending in the real economy should be lowered in a bid to lower manufacturing expenses, increase productivity, earnings and access to capital for expansion, a higher interest rate will reduce the manufacturing sector’s capacity to borrow, because of expansion, interest rate hikes should be kept to a minimum; significant increases as a matter of fact be limited to situations in which tighter monetary regulation is truly ideal.