The term investment implies different meanings in business management, economics and finance but all are closely related to each other.While the bank interest rate to the consumers is defined as the current rate of return given on the savings.
Investment decision plays key role in purchasing assets for business enterprises as they tend to maximize the profits. So in business management, they have to evaluate the net benefit of making further investment and also the factors on which investment depends, the most important of which is bank interest rate.
According to the Macroeconomics concept the interest rate given by banks and investment are inversely related to each other. If banks increases the interest rates the people draw money out from the business and put it in the banks as they get high return from there thus high reward from the banks.
The business owners who made investments in their business by borrowing from the banks cut down their investment if the bank interest rate increases as they have to pay high costs of making investment which reduces their profitability.
