The African Business Review May-Jun 2014 | Page 15

and inflation rate in WAMZ. Our findings shows that a 100%
increase (decrease) in income leads to 66.7% rise (fall) in inflation.
This implies that increased income stimulates production, which
tends to increase the aggregate demand and thus bring about
increased inflation in WAMZ. This finding is in line with our
a-priori expectation and in tandem with finding of Kaehler
(2010). Own interest rate exerts a negative impact on inflation
in WAMZ. The own inters rate captures the opportunity cost

Of the all licensed financial institutions in
WAMZ, about 60% of these operate in Nigeria.
Nigeria accounts for 87% of total commercial
banks assets; Ghana has a share of 10%,
while other countries combined account for
about 3%. This indicates that the issue of
contagion cannot be overruled as bank runs
in Nigeria can spill over to other countries in
WAMZ.

of holding money and it is expected to have a negative effect
on inflation. The relationship between own interest rate and
inflation is statistically sign