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The Determinant Of Savings In Nigeria (1985-2011)
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Nigerians savings still falls below the requirement of its financial
system due to low per capital income, under investment in productive
instruments, and investment in unproductive channels e.g. Glod, jewel,
income inequalities and demonstration effects, etc.to remedy this
problem depend on the level of development of the financial sector
mentioned above as well as the saving habit of the citizens. The
availability of investible funds can be a starting point for all
investment. In the economy which will eventually translate to economic
growth and development (Uremadu 2006).
The relationship among
savings, investment and growth has historically been very close, hence
the unsatisfactory growth performance of several developing countries,
example Nigeria, has been attributed to poor savings and investment.
This poor growth performance has generally led to a dramatic decline in
investment. Domestic savings rates have not better, thus worsening the
already uncertain balance of payment position, the role of savings in
the economic growth of any country cannot be overemphasized (Cheta
1999). Conceptually, savings represent that part of income not spent on
current consumption.
Institutions in financial sector like deposit
money banks (DMBS) commercial Banks mobilize savings in an economy, the
deposit rate must be relatively high and inflation rate stabilized to
ensure a high positive real interest rate which motivates investors to
save from their disposable income.
In Nigeria Odoko and Englama
(2004) are of the view that the level of funds mobilization by financial
institution is quite low due to a number of reason, ranging from low
savings deposits rates of the poor banking habit or culture of people.
According to them another impediment to funds mobilization is the
attitudes of banks to small savers.
Another limitation of saving
mobilization is the fact that the concentrations of banks are heir
offices are based in favour of urban areas. Among the reasons for this,
is the fact that the established banks under rate the volume of savings
seeking to be mobilized and channeled into productive investment in the
rural areas. It is often argued that since the rural economy operates at
a near subsistence level, there is very little that can be squeezed out
of income and consumption. Because of this, it has not been realized
that the large volume of idle funds, through is small units per
individuals exist in the rural areas.
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ABSRACT - [ Total Page(s): 1 ]The term savings refers to the part of income immediately spent or consumed but reserved for futureconsumption, investment or unforeseen contingencies. This study examines the determinants of savings in Nigeria between 1985-2011, which will enable us to proffer solution for the improvement of savings in the economy, since it is an important component of the economic development of any country. The method of analysis used in testing the hypothesis are coefficient of multiple determination {R2}, T ... Continue reading---
