Determinants of Savings in Kenya: Time Series Analysis

Abstract

With a steep fall in the national savings rate in developing economies attributed to external shocks and stagnation of economic growth, this study will investigate the key drivers that explain variations in the public savings rate in Kenya using time series data spanning from 1975 to 2020. Available published economic literature has only investigated the determinants of savings in industrialized economies while ignoring low-income countries. To estimate the main determinants of national savings in Kenya, the study will employ the ordinary least squares (OLS) estimation technique coupled with time series secondary data. From the estimation result, interest rate, inflation rate, income levels and consumption levels have been identified as the key drivers of the saving culture in Kenya. Public and private policymakers need to identify ways of managing these drivers to promote a higher saving behavior in Kenya.