The relationship between the Prime Rate and the components of the business environment in Mozambique

Abstract

In recent years, Mozambique has experienced remarkable economic growth, with diversification in various areas of the economy. One of the pillars of this growth is the Prime Rate, a reference interest rate set by the central bank. This rate directly influences the loan and financing rates in the market. Additionally, the organizational climate, which reflects the internal environment of companies, has also undergone significant transformations in Mozambique, being influenced by cultural traditions, social values, and political decisions. The study seeks to understand the relationship between the components of the business environment and the Prime Rate in Mozambique, unraveling how these elements mutually influence each other in the country's socio-economic context. The analysis revealed that the organizational climate in Mozambique is influenced by the Prime Rate. Specifically, a 1% increase in the Prime Rate results in a significant drop in the organizational climate. Regarding the employment outlook, there is a significant negative relationship with the Prime Rate. On the other hand, current employment shows a positive relationship with the Prime Rate. As for the price outlook, although there are indications that an increase in the Prime Rate might decrease the price outlook, this relationship is not statistically significant. The models used to evaluate these relationships vary in their ability to explain the variations, with the organizational climate model explaining 29.6% of the variation and the price outlook model only 9.39%.