ABSTRACT

Abstract

In recent times, the economy of Nigeria was affected by low GDP growth rates, high unemployment and inflation rates and debilitating debt over-hang. Perhaps these negative economic tendencies might have contributed to the low levels of gross domestic savings in the economy. Hence, there was a need to examine the proximate causes of changes in the level of the savings rates. To achieve the stated objectives of the study, Gross Domestic Savings Model was formulated on the basis of functional linear relationships with the identified predictor variables. The fitted multiple regression linear model adopted the ordinary least squares (OLS) techniques of data analysis, and the mix stationarity of the time series data sets of the Savings Model informed the decision to apply the autoregressive distributed lags (ARDL) methods of data analysis. The study relied on secondary sources of time series data obtained mainly from the Central Bank of Nigeria and National Bureau of Statistics for the formulated multiple regressions Savings Model. The outcome of the empirical investigations evinced that there were direct positive relationships between Gross Domestic Savings and the regressors namely real GDP per capita, deposit interest rates and population growth rates. But the results established an inverse relationship between gross domestic savings levels and the inflation rates. Also, the bound tests indicated the existence of a long-run relationship between the savings rates and the predictor variables. The study provided a better understanding of the determinants of gross domestic savings and proffered that government should apply policy mix of monetary and fiscal regulatory frameworks to ensure the stability of inflation and interest rates in the economy that provided considerable impulse to changes in the savings rates during the observed period. Also, favourable changes in the income tax policies of the government will go a long way in improving the real GDP per capita and invariably the gross domestic savings levels in the economy.

Keywords: Gross Domestic Savings; Real GDP Per Capita; Deposit Interest Rate; Inflation Rate; Population Growth Rate.