DETERMINANTS OF FORMAL FINANCIAL SAVINGS IN NIGERIA. (1970 1990). AN EMPIRICAL ANALYSIS
DETERMINANTS OF FORMAL FINANCIAL SAVINGS IN NIGERIA. (1970 1990). AN EMPIRICAL ANALYSIS
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Date
1992-10
Authors
KENNETH, SIMO KABA
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Abstract
Development economists hypothesize that savings is a
key determinant of economic growth. These economists,
however, have different opinions when they examine
financial savings, the factor influencing the trend of
financial savings, and the relation of savings to
particular determinants. In fact, their opinions differ
most when they seek to consider the most potent factors
determining real financial savings per capita. The main
objective of this work is to determine the major
factors or variables determining formal-sector
financial savings in Nigeria and relate the findings to
what development economists have postulated on the
issue of determinants of financial savings. Two
multiple regression tests were run, using data from
1970-1990. The first uses simple time series data of
real financial savings per capita as the dependent
variable, and the second, a three year moving average
of the real financial savings per capita as its
dependent variable. Seven explanatory variables were
tested on these dependent variables. In the first
regression it was found out that the number of
financial institutions per community (degree of
penetration of financial institutions into the
economy), the urbanization rate and the net foreign
investment in the country are the most potent factors
determining real financial savings in Nigeria. In the
second regression, the net foreign investment and the
number of financial institutions in the country proved
to be the most potent factors.
The conclusion to be drawn is that, in the
Nigerian context, most people save because the
opportunities to save are made available to them. Both
regressions equally prove that the dependency ratio in
Nigeria has the most retarding (negative) effects on
real financial savings. The high rate of population
growth tends to retard the ability of households to
save- The other variables proved to be positively
related to real financial savings but not very
significantly viz, the real interest rates, and the
export performance.
The results generally meet conventional theory on
the determinants of financial savings in developing
countries.
Description
FACULTY OF ARTS AND SOCIAL SCIENCE
DEPARTMENT OF ECONOMICS
AHMADU BELLO UNIVERSITY, ZARIA
BEING A THESIS SUBMITTED TO THE POSTGRADUATE SCHOOL, IN
PARTIAL FULFILMENT OF THE REQUIREMENTS FOR THE AWARD
OF THE MASTER OF SCIENCE (MSC) DEGREE IN ECONOMICS, IN
THE FACULTY OF ARTS AND SOCIAL SCIENCES, AHMADU BELLO
UNIVERSITY, ZARIA.
OCTOBER 1992
Keywords
DETERMINANTS,, FORMAL FINANCIAL SAVINGS,, NIGERIA,, EMPIRICAL ANALYSIS