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Effect of interest rate on savings behaviour among Ghanaians: evidence from Kumasi, Ghana

Author

Listed:
  • Boateng, Elliot
  • Amponsah, Mary

Abstract

The purpose of this paper is to explore how Ghanaians respond to changes in interest rate on savings. In other to effectively explain how changes in interest rate affect the savings behaviour among Ghanaians, the study administered 200 questionnaires and analysis of the data was done with descriptive statistics and chi-square test. The results show that, in general, changes in deposit interest rate loosely explain why people save. Again, decision to save with respect to changes in deposit interest rate depends on the knowledge the individual have on deposit interest rate and notices they receive from banks with respect to changes in deposit interest rate. The study further noted that, changes in income strongly explain the reasons why individual save. The chi-square result showed that, interacting knowledge on deposit interest rate with changes in interest rate may influence savings. Thus, increasing interest rate on deposit alone will not bring about increase in savings; however knowledge on the variable in question (deposit interest rate) is significant.

Suggested Citation

  • Boateng, Elliot & Amponsah, Mary, 2015. "Effect of interest rate on savings behaviour among Ghanaians: evidence from Kumasi, Ghana," MPRA Paper 63926, University Library of Munich, Germany, revised 20 Mar 2015.
    • Handle: RePEc:pra:mprapa:63926
    as

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    References listed on IDEAS

    as
    1. Keun-Yeob Oh & Bong-Han Kim & Hong-Kee Kim & Byung-Chul Ahn, 1999. "Savings-investment cointegration in panel data," Applied Economics Letters, Taylor & Francis Journals, vol. 6(8), pages 477-480.
    2. Ketenci, Natalya, 2014. "The Feldstein –Horioka Puzzle and structural breaks: Evidence from the largest countries of Asia," MPRA Paper 54660, University Library of Munich, Germany.
    3. Dmitry Kulikov & Karsten Staehr, "undated". "Microeconometric analysis of household saving in Estonia: income, wealth, financial exposure," Bank of Estonia Working Papers wp2007-8, Bank of Estonia, revised 03 Feb 2015.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    savings rate; deposit interest rate; knowledge on deposit interest rate; chi-square;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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    This paper has been announced in the following NEP Reports:

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