Impact of government domestic borrowing on interest rate
David Prah, Emmanuel Junior Tenakwah
Using data from 2007-2011, the study examined the relationship between interest rate, inflation and domestic debts using linear regression method The results revealed that (57%) of the variation in interest/lending rate can be explained by domestic debts and at an alpha level of 0.05, the researchers failed to reject the H1 and conclude that there is a significance relationship between debts and interest/lending rates. It was concluded that sixty four percent (64%) of the variation in inflation can be accounted for by domestic debts. This conclusion was made base on the R-Square. The researchers further therefore failed to reject the H2 and conclude that there is a relationship between inflation and domestic debts. It is recommended that there should be an improvement in public finances in other to generate a surplus on recurrent operations and also Government must be cognizant of the use of domestic credit by the statutory bodies.