SAVINGS MOBILIZATION IN NIGERIA: EMPIRICAL INVESTIGATION OF FINANCIAL REPRESSION (1975 - 1996)
SAVINGS MOBILIZATION IN NIGERIA: EMPIRICAL INVESTIGATION OF FINANCIAL REPRESSION (1975 - 1996)
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Date
1998-10
Authors
OKPE, Isa Jibrin
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Abstract
Most less developed countries are conscious of the importance of savings in the
development process. To adequately harness savings in Nigeria various policies have
been evolved; and one of such policies was interest rate deregulation. This thesis
examines savings mobilization in Nigeria. It also evaluates the non interest rate
structural adjustment reform policies such as foreign exchange deregulation,
commercialization and privatization. The trends in interest rate and savings are
analysed. The thesis also proffers recommendations to the appropriate authorities.
Using ordinary least squares method, data from 1975 to 1996 which covered the
two policy thrust - regulation and deregulation are examined, to ascertain whether
interest rate had significant impact on savings during the period under study. Three
regression tests were run. One covered the period of regulation (1975 to 1986), the
second covered the period of deregulation (1987 - 1996), While the third covered the
period of regulation and deregulation (1975 - 1996).
It was observed from the empirical investigation that interest rate deregulation
had significant impact on savings than interest rate regulation, which showed that
financial savings in Nigeria was not repressed during the period 1987 - 1996. While
gross domestic product and lagged savings rate had a positive and significant impact on
savings which revealed that real interest rate, gross domestic product and lagged savings
rate are potent
factors that determine savings in Nigeria. The non-interest rate structural adjustment
reform policies such as deregulation of foreign exchange, commercialization and
privatization has a negative but significant impact on savings in Nigeria.
It was also shown that the non-interest rate structural adjustment programme
introduced during the period of deregulation has negative and significant impact on
savings.
The thesis also observed that various factors may have caused the decline in
savings during the period 1975 to 1996. These factors are: a decline in per capita
income; high dependency rate; the decline in foreign exchange receipts and high
proportion devoted to debt servicing; leading to decline in domestic resources; low
capacity utilization in manufacturing and industrial sector leading to high rate of
unemployment; inaccessibility to financial institutions, especially in the rural areas;
decine in population per bank branch and loss of confidence in the banking sector due
to distress.
Recommendations were however drawn based on the findings of this thesis. It
was recommended that interest rate should be completely deregulated, since it has a
positive and significant impact on savings than interest rate regulation. The federal
government should also discontinue the aspect of the non-interest rate Structural
Adjustment Policies; such as faulty foreign exchange policy, privatization and
commercialization; since they have negative impact on savings.
Description
A THESIS SUBMITTED TO THE POST GRADUATE SCHOOL. IN PARTLAL
FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF THE MASTER OF
SCIENCE (M.Sc.) DEGREE IN ECONOMICS
DEPARTMENT OF ECONOMICS
FACULTY OF SOCIAL SCIENCES
AHMADU BELLO UNIVERSITY
ZARIA
OCTOBER, 1998
Keywords
SAVINGS MOBILIZATION,, NIGERIA,, EMPIRICAL INVESTIGATION,, FINANCIAL REPRESSION (1975 - 1996)