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The Determinant Of Savings In Nigeria (1985-2011)
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In Nigeria there is basically
lack of incentives to savings which had adversely affected savings. Some
of these factors include poor banking habits, attitude of banks to
small savers, poor orientation, unemployment, instability in the
political system etc, corrupt taxation system, instability in banking
system etc. one of the problems of mobilizing savings and deposits has
always been a major problem for economic growth and development in
Nigeria.
According to Friedman (1952) the impact of health on saving
has been long recognized in theory, but its effect on the aggregate
savings have been considered to be over shadowed by another factor,
inflation causes price of tangible assets to rise sharply and changes in
net worth based on rising market value giving the illusion of well
being the magnitude of the impact of wealth on saving rate may have the
reassured experiences of economic crisis have highlighted the fact low
and declining saving rate have contributed to generate unsustainable
current account deficits in many countries.
The above arguments
underscores the fact that there exist a link between savings and the
growth performance of the economy, both in Nigeria and in the world
over. This necessitates the need to carry out a detailed study of what
actually determines the rate of savings in the contexts of Nigeria
economy.
1.2 STATEMENT OF THE PROBLEM
Saving is a macro-economic
variable used to attain economic growth and development (Wikipedia
encyclopedia, 2009). In Nigeria, there is lasting need to further
step-up efforts in mobilizing small savings in both urban and rural
areas, given the poor savings culture of the Nigerian people and the
theoretical link between saving and investment which underscore the
importance of savings on the growth of every economy. When savings are
low, interest rate increases and investments becomes low there will be
low income and decrease in the Gross National Product (GNP) and Gross
Domestic Product (GDP) of the nation which leads to the poor living
standard of the people and hinders the depositors from savings.
This
research work would attempt to examine the magnitude and nature of such
variable as interest rate, inflation, income, urbanization on savings in
Nigeria.
1.3 RESEARCH QUESTION
Important research question that
arise include what are then the determinant of saving in Nigeria
economy? Could it be that there are few dominant determinants of saving
due to our poor economy? Could these dominants be consumption rather and
interest or many more? Why is the rate of savings in Nigeria very low?
Is it as a result of saving in Nigeria very low? Is it as a result of
policies requiring further review to make if effective the study intends
to answer these questions?
1.4 OBJECTIVES OF THE STUDY
The broad
objectives of the study are to examine the determinant of savings in
Nigeria economy. However, the specific objectives are as follows.
1. To determine the impact of savings on the economic growth
2. To determine whether consumption expenditure is a major determinant of savings in Nigeria economy.
3. To determine the magnitude and nature of the elasticity’s of the savings functions in Nigeria.
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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---
