IDEAS home Printed from https://ideas.repec.org/a/bcp/journl/v5y2021i12p522-528.html
   My bibliography  Save this article

Impact of Interest Rate Deregulation on Gross Domestic Savings in Nigeria

Author

Listed:
  • Mathias A. Chuba

    (Department of Economics, Achievers University Owo, Km 1, Idasen-Ute Road, P. M. B. 1030, Ondo State, Nigeria)

Abstract

Nigeria embarked on interest rate deregulation in August, 1987 in order to increase gross domestic savings through an increase in interest rate. The results of previous studies with respect to the impact of interest rate deregulation on gross domestic savings in Nigeria are mixed. This paper argues that interest rate deregulation does not have positive impact on gross domestic savings in Nigeria because savings depends on income rather than interest rate. The main objective of this paper is to determine the impact of interest rate deregulation on gross domestic savings in Nigeria from 1970-2019 using a dummy variable regression technique. The result of the investigation indicates that interest rate deregulation has an insignificant negative impact on gross domestic savings in Nigeria. The gross domestic product has a significant positive relationship with gross domestic savings in Nigeria. The Keynesian proposition that savings are mainly determined by income rather than interest rate is applicable in Nigeria. The classical theory of interest rate and the theory of high interest rate policy that was popularized by McKinnon (1973) and Shaw (1973) are not applicable in Nigeria. The target of economic policy should be gross domestic product and not interest rate because naturally gross domestic saving will increase if gross domestic product increases in Nigeria.

Suggested Citation

  • Mathias A. Chuba, 2021. "Impact of Interest Rate Deregulation on Gross Domestic Savings in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 5(12), pages 522-528, December.
    • Handle: RePEc:bcp:journl:v:5:y:2021:i:12:p:522-528
    as

    Download full text from publisher

    File URL: https://www.rsisinternational.org/journals/ijriss/Digital-Library/volume-5-issue-12/522-528.pdf
    Download Restriction: no
    File URL: https://rsisinternational.org/virtual-library/papers/impact-of-interest-rate-deregulation-on-gross-domestic-savings-in-nigeria/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Deaton, Angus, 1992. "Understanding Consumption," OUP Catalogue, Oxford University Press, number 9780198288244.
    2. Gupta, Kanhaya L, 1987. "Aggregate Savings, Financial Intermediation, and Interest Rate," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 303-311, May.
    3. Giovannini, Alberto, 1985. "Saving and the real interest rate in LDCs," Journal of Development Economics, Elsevier, vol. 18(2-3), pages 197-217, August.
    4. Corbo, Vittorio & Schmidt-Hebbel, Klaus, 1991. "Public policies and saving in developing countries," Journal of Development Economics, Elsevier, vol. 36(1), pages 89-115, July.
    5. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
    6. Tullio Jappelli & Marco Pagano, 1994. "Saving, Growth, and Liquidity Constraints," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 83-109.
    7. Susan M. Collins, 1991. "Saving Behavior in Ten Developing Countries," NBER Chapters, in: National Saving and Economic Performance, pages 349-376, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ndanshau, Michael O. A. & Kilindo, Ali A. L., 2012. "Interest Rates and Financial Savings in Tanzania: 1967 - 2010," MPRA Paper 44387, University Library of Munich, Germany, revised Jan 2013.
    2. Cardenas, Mauricio & Escobar, Andres, 1998. "Saving determinants in Colombia: 1925-1994," Journal of Development Economics, Elsevier, vol. 57(1), pages 5-44, October.
    3. Edwards, Sebastian, 1996. "Why are Latin America's savings rates so low? An international comparative analysis," Journal of Development Economics, Elsevier, vol. 51(1), pages 5-44, October.
    4. Baharumshah, Ahmad Zubaidi & Thanoon, Marwan A. & Rashid, Salim, 2003. "Saving dynamics in the Asian countries," Journal of Asian Economics, Elsevier, vol. 13(6), pages 827-845, January.
    5. Patrick Honohan, 1995. "The Impact of Financial and Fiscal Policies on Saving," Papers WP059, Economic and Social Research Institute (ESRI).
    6. Kivilcim Metin Ozcan & Asli Gunay & Seda Ertac, 2003. "Determinants of private savings behaviour in Turkey," Applied Economics, Taylor & Francis Journals, vol. 35(12), pages 1405-1416.
    7. Morande, Felipe G., 1998. "Savings in Chile. What went right?," Journal of Development Economics, Elsevier, vol. 57(1), pages 201-228, October.
    8. Hansen, Hermann-Josef, 1996. "Der Einfluß der Zinsen auf den privaten Verbrauch in Deutschland," Discussion Paper Series 1: Economic Studies 1996,03, Deutsche Bundesbank.
    9. Delwar Hossain, 2014. "Differential Impacts of Foreign Capital and Remittance Inflows on Domestic Savings in the Developing Countries: A Dynamic Heterogeneous Panel Analysis," Departmental Working Papers 2014-07, The Australian National University, Arndt-Corden Department of Economics.
    10. Nola Reinhardt, "undated". "Saving Rates in Latin American: Why Reformers Got It Wrong," Working Papers 2007-01, Smith College, Department of Economics.
    11. Sebastian Edwards, 1995. "Why are Saving Rates so Different Across Countries?: An International Comparative Analysis," NBER Working Papers 5097, National Bureau of Economic Research, Inc.
    12. Dominique Hachette, 1998. "Ahorro Privado en Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 35(104), pages 3-48.
    13. Reinhart, Carmen & Vegh, Carlos, 1994. "Inflation stabilization in chronic inflation countries: The empirical evidence," MPRA Paper 13689, University Library of Munich, Germany.
    14. Jinyoung Hwang & Jong Ha Lee, 2013. "Financial deepening and business cycle volatility in Korea," Applied Financial Economics, Taylor & Francis Journals, vol. 23(21), pages 1693-1700, November.
    15. Aysit Tansel & Ceyhan Ozturk & Erkan Erdil, 2021. "The Impact of Body Mass Index on Growth, Schooling, Productivity, and Savings: A Cross-Country Study," Koç University-TUSIAD Economic Research Forum Working Papers 2118, Koc University-TUSIAD Economic Research Forum.
    16. Alejandro López & Martha Misas & Hugo Oliveros, 1996. "Understanding Consumption in Colombia," Borradores de Economia 058, Banco de la Republica de Colombia.
    17. Andersson, Björn, 1999. "On the Causality Between Saving and Growth: Long- and Short-Run Dynamics and Country Heterogeneity," Working Paper Series 1999:18, Uppsala University, Department of Economics.
    18. Liang, Qi & Teng, Jian-Zhou, 2006. "Financial development and economic growth: Evidence from China," China Economic Review, Elsevier, vol. 17(4), pages 395-411.
    19. André Kallåk Anundsen & Ragnar Nymoen, 2015. "Did US Consumers 'Save for a Rainy Day' Before the Great Recession?," CESifo Working Paper Series 5347, CESifo.
    20. Sulaiman, Saidu & Masih, Mansur, 2017. "Is liberalizing finance the game in town for Nigeria ?," MPRA Paper 95569, University Library of Munich, Germany.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bcp:journl:v:5:y:2021:i:12:p:522-528. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dr. Pawan Verma (email available below). General contact details of provider: https://rsisinternational.org/journals/ijriss/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.