THE EFFECT OF INFLATION ON RETURN ON INVESTMENT IN NIGERIA


FASHAGBA, Mathew Olasehinde
Department of Business Administration
Federal University Lokoja
mathew.fashagba@fulokoja.edu.ng
ATSANAN, Angela
Department of Banking and Finance
Federal University Lokoja
angela.atsanan@fulokoja.edu.ng
YADOK, Namdak Godwill
Department of Accounting
Federal University Lokoja
nandakyadok@gmail.com
ADEBAYO, Theresa Y.
Department of Business Administration
Federal University Lokoja
theresa.adebayo@fulokoja.edu.ng

ABSTRACT
The rate of return on investment plays significant roles on the level of investment in any
economy. Investors seek to investment in opportunities with maximum potential expected return.
The difference between the nominal rate of return and the inflation rate is the real return on
investment. This study seeks to find the effect of inflation on return on investment in Nigeria.
The study used secondary data for inflation and interest rate in Nigeria for 20 years covering
1998 to 2017. The method of data analysis employed is t-test and ANOVA. The study found that
rate of inflation is significantly high and reduces real return on investment to negative value, and
that inflation and return relationship is very volatile. Hence the study recommends strict
measures to control inflation rate for safe investment and stable economic growth.

Keywords: Inflation rate, interest rate, investment return, management

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