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The world has gone through various economic crises in the past century, and their effects have had
varying implications on the economies of countries all over the world. In a bid to help stabilise
economies all over the world, various measures have been put in place. Some of these measures
include regulations and policies by the Bretton Woods institutions (World Bank and International
Monetary Fund) and their agencies. The idea behind these measures is to ensure sustainable growth
and development among member states and other countries of the world. Some of these policies
include the privatization and liberalization policies of the Bretton Woods institutions as well as other
policies bordering on such economic and social benefits for people all over the world. The Nigerian
economy in our contemporary time can be described as passing through a rather ‘volatile’ phase with
respect to interest rate, financial development and foreign capital inflow. Thus, this study investigated
the impact of interest rate spread and financial development on foreign capital inflow in Nigeria.
Several studies have been carried out using different methodologies, such as; co-integration equation,
multivariate vector auto regressive (VAR) model and vector error correction technique. Each
methodology used was in line with the objective of the research in question. However, to achieve its
objective, this paper adopted the Classical Linear Regression Model. The results of the study showed
that financial development has a positive impact on foreign capital inflow, while interest rate spread
on the other hand, was also found to have a positive impact on foreign capital inflow.
