A STUDY INTO THE DETERMINANTS OF SAVINGS IN NIGERIA


A STUDY INTO THE DETERMINANTS OF SAVINGS IN NIGERIA

ABSTRACT

This study examined the determinants of personal savings in
Nigeria: a case study of Ilorin Metropolis. Therefore, the objectives
of the study are to examine the savings culture; if people save or not, the places of saving and to examine the determinants of personal savings in Ilorin metropolis in order to encourage
increased savings by individuals. The modified log it model and Ordinary Least Square (OLS) was used for analysis.It concluded that age distribution, income and wealth are directly proportional
to personal savings in Ilorin metropolis. The income level and socio-economic variables are positively correlated to the places of saving.

INTRODUCTION

Keynes (1936) defined savings as the excess of income over expenditure on consumption. Savings is the part of the disposable income of the period which has not passed into consumption (Uremadu, 2007).
The role of personal savings in the economic growth of any country is very important. Personal savings is not just relevant for investment or capital formation rather it performs a special role towards macro-
economic stabilization. Of the several forms of savings in an economy, personal savings has been agreed to contribute to the substantial part of aggregate savings in both industrialised and developing countries (Klaus and Coresseti, 1991).Poterba (1987) study has seen the importance of decomposing private savings into household which are the ultimate owners of incorporated business; take into
account the saving plans of corporation decision. If this is the case, then as explained by Poterba (1987), households ‘pierce the corporate veil’ aggregate private saving becomes the variable of interest and little information is gained from further breaking down private saving into household and corporate saving. Private saving from national income data are defined as
the difference between personal disposable income and personal consumption outlays.The Nigerian data reveal a small volume of savings and a low voluntary saving rate as low as 8percent. Although, global private savings have represented a relatively stable share of world GDP at around 2% for the past quarter of a century, there have been considerable variations in saving patterns across countries and
regions (Gianluigi and Miralles, 2007).The effects of income earned, age distribution and wealth holding on personal savings are inconclusive and vary across countries and regions. About 60% of Nigerians live below poverty line, earning less than 2 dollars a day while unemployment rate is running high at about 20%. However, graduate unemployment rate is probably as high as 50%t. Some have remained unemployed for as long as five years (Onwuka, 2007). It will be very difficult for this set of people to save yet without individual savings there could be no capital accumulation for investment.Christopher (2008),

TABLE OF CONTENTS
TITLE PAGE
APPROVAL PAGE . ii
DEDICATION
ACKNOWLEDGMENT
ABSTRACT
TABLE OF CONTENTS

CHAPTER ONE
INTRODUCTION

Background of Study
Statement of Problems
Aim of study
Objectives of the Study
Statement of Hypothesis
Significance of the study
Scope and limitation of the study

CHAPTER TWO
LITERATURE REVIEWS
2.1 Stylized evolution of savings in Nigeria
2.2 Trend of savings in Nigeria
2.3 Theoretical review and Evidence
2.4 Empirical review and Evidence
2.5 Factors influencing savings in Nigeria

CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Model Specification
3.2 Method of Evaluation
3.3 Economic Apriori Criteria
3.4 Data Required and Source

CHAPTER FOUR
PRESENTATION OF REGRESSION RESULTS
4.1 ADF Test for Stationary
4.2 Co integration test
4.3 Presentation of model results
4.4 Economic interpretation of results
4.5 Statistical Criteria for Evaluation of Result (R2)
4.6 Econometric criterion (Second order test)
4.7 Evaluation of the hypothesis

CHAPTER FIVE
SUMMARY, RECOMMENDATIONS AND CONCLUSION
5.1 Summary of Findings
5.2 Policy Recommendations
5.3 Conclusion
Bibliography
Appendixes

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