An Analysis of Macroeconomic Variables and Interest Rate Spread in Pakistan

International Journal of Management Sciences and Business Research, Vol. 6, Issue 3, March 2017

8 Pages Posted: 7 Apr 2017

See all articles by Tahir Jagirani

Tahir Jagirani

Mohammad Ali Jinnah University (MAJU)

Zulifiqar Zaidi

University of Sindh

Hira Tahir

COMSATS Institute of Information Technology, Lahore

Date Written: March 2017

Abstract

The research was carried out to examine the impact of macroeconomic variables on Interest Rate Spread (IRS) in the context of Pakistan. The secondary data from 2000 to 2014 was taken to evaluate the results. After evolving of 8 hypotheses, three out of eight hypotheses were rejected, and 5 were accepted. Simple multiple regression model was used as a statistical tool. The results concluded that model was statistically significant and macroeconomic variables have a significant effect on interest rate spread (IRS). Results also depicted that there is a negative relationship between Interest Rate Spread (IRS) and Domestic Gross Product (GDP), Inflation and lending interest rate (LIR). Moreover, there is a positive relationship between IRS and Risk Premium on Lending (RPL).

Keywords: Interest Rate Spread (IRS), Gross Domestic Product, Lending Interest Rate (LIR), Risk Premium on Lending (RPL)

Suggested Citation

Jagirani, Tahir and Zaidi, Zulifiqar and Tahir, Hira, An Analysis of Macroeconomic Variables and Interest Rate Spread in Pakistan (March 2017). International Journal of Management Sciences and Business Research, Vol. 6, Issue 3, March 2017, Available at SSRN: https://ssrn.com/abstract=2947560

Tahir Jagirani (Contact Author)

Mohammad Ali Jinnah University (MAJU) ( email )

74 E
Blue Area, Jinnah Avenue
Islamabad, Punjab 46000
Pakistan

Zulifiqar Zaidi

University of Sindh

Jamshoro, Sindh
Pakistan

Hira Tahir

COMSATS Institute of Information Technology, Lahore

1.5 KM Defence Rd
Lahore
Pakistan

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