Abstract
<p>Savings in an economy can assume one of the several forms. These includes: Personal savings, corporate savings or business savings and Government savings. This study evaluated growth impact of savings on the Nigerian economy. The study specifically examined the effect total savings, private consumption expenditure, gross fixed capital formation and core credit to the private sector on the gross domestic product of Nigeria. Data for the study were sources from CBN statistical bulletin for a period of ten (10) years spanning through 2011 to 2020. The sourced data were analysed using multiple regression analysis, result of the analysis shows that total savings has positive and significant effect on the gross domestic product of Nigeria. It was also observed that private consumption expenditure has a negative and insignificant effect on the gross domestic product of Nigeria. The study further revealed that gross fixed capital formation has a negative and significant effect on the gross domestic product of Nigeria. It was also observed that core credit to the private sector has positive and significant effect on the gross domestic product of Nigeria. Based on the findings, the study recommends that the government should set a sound and fertile environment in order to foster domestic saving that will help to increase the level of economic growth in Nigeria. Government should increase the deposit rate of the deposit money banks in Nigeria through monetary policy. Government should transform the financial sector of the country. Government should create favorable condition in order to mobilize domestic savings from the small depositors.</p><p>JEL: D01; D31</p><p> </p><p><strong> Article visualizations:</strong></p><p><img src="/-counters-/edu_01/0987/a.php" alt="Hit counter" /></p>
Highlights
There has been a serious debate on the implications of savings and investment in promoting economic growth in many countries around the world
The results show the mean to stand at -N373228, -N5234525, N479802 and N3608842 with a standard deviation of N18078111, N20287034, N4562009, N20090362 and N413280 for Gross domestic product, total savings, Private consumption expenditure, Gross Fixed Capital Formation and Core Credit to the Private Sector respectively
R2 of 0.355404 shows that 36% variation on gross domestic product was explained by changes in Gross Fixed Capital Formation
Summary
There has been a serious debate on the implications of savings and investment in promoting economic growth in many countries around the world. Neoclassical theory argues that increase in the savings rate boosts steady-state output by more than its direct implications on investment. This is because the increase in income raises savings, leading to a further rise in investment (Verma, 2017). The persistence of rising magnitude of savings and investment in Nigeria which was characterised by the level of private sector operation has adverse implication on economic growth. Savings is the portion of disposable income not spent on consumption of consumer goods but accumulated or invested directly in capital equipment or in paying off a home mortgage, or indirectly through purchase of securities
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