Lending rate and firms’ investment decisions : Evidence from Ghana

This paper has examined the impact of lending rate on firms’ investment decision in Ghana. The Autoregressive Distributed Lag (ARDL) estimation framework was applied to time series data from 1980 to 2011. We found that lending rate has significant negative impact on private investment in both short run and long run in Ghana. It was also found that real GDP has a significant direct impact on private investment in both the short run and the long run periods. Our findings have important implications for investment policy in Ghana.