DOI: 10.36347/sjebm.2016.v03i05.003

Pages: 258-262

The importance of the capital market to any nation’s economic growth cannot be overemphasized. Nations have embraced stock trading in order to raise and distribute capital resources for the development of their economy, and Nigeria not being an exception have faced numerous challenges associated with growing economies. The nature and trend of interest rate have been found to exert a lot of influence on the growth of the capital market even in the developed countries. This is why this paper took a mindful look at the impact of interest rate on capital market growth in Nigeria. The paper explored the history of the Nigerian capital market, highlighted the challenges to the growth of the Nigerian capital market and examined the relationship between interest rate and investment in relation to their impact on the Nigerian capital market growth. It is discovered that the higher the interest paid on deposits by banks, the more investors patronize the banks, consequently pulling their resources from the capital markets leaving the market in a stunted nature. It is the paper’s position that the fluctuation of interest rate constitutes a major impact on the growth of the Nigerian capital market.