JAMB - Economics (2013 - No. 42)
The rate of interest change on loans depends largely on
the prevailing exchange rate
marginal efficiency of capital
the risk associated with the loan
the prevailing tax rate
Forklaring
Interest rates are determined, in large part by central banks who actively commit to maintaining a target interest rate. They do this by using the open market operations. To discourage borrowing, interest rates would be set high and set low to encourage lending. Therefore interest rates are determined mainly by the prevailing exchange rate