On Interest Rates and Other Determinants of Financial Savings: An Empirical Investigation in Tanzania

Ndanshau, Michael O. A.

doi:10.2139/ssrn.2142356

Cited by 7 publications

(11 citation statements)

References 70 publications

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“…The study reveals that real deposit rate of interest does not affect private savings. Similarly, the studies by Odhiambo (2008), Ndanshau (2012) and Lipumba et al (1990) on interest rate reforms, financial deepening and savings in Tanzania conclude that there is no strong evidence on the effect of real interest rate on national savings in Tanzania. However, the interest rate reform has positive impact on financial deepening which ultimately affects saving rate.…”

Section: Empirical Evidencementioning

confidence: 99%

Empirical Investigation of the Determinants of Tanzania’s National Savings

Epaphra¹

2014

JEDS

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Understanding the nature of national savings behavior is critical in designing policies to promote savings and investment which in turn enhance economic growth through capital formation. This paper empirically examines the determinants of savings in Tanzania for the 1970-2010 period. The conceptual framework for the paper is derived from the life-cycle/permanent income hypothesis. Augmented Dickey Fuller and Phillips-Perron tests are used to test stationarity of all time series. To test long-run relationship of the variables, Johansen test is applied. The results reveal that disposable income, real GDP growth, population growth and life expectancy have a positive impact on savings in Tanzania. The results also reveal that inflation, has a negative impact on national savings. Furthermore, the paper establishes the direction of causality between national savings and economic growth. The results on this causal relationship suggest that real GDP growth causes national savings and not otherwise. This implies that that policies geared towards real GDP growth rate should be given first priority if the national savings trend is to be enhanced over time. Furthermore, from a policy point of view the precautionary motive for saving is not supported by the findings as inflation which captures the degree of macroeconomic volatility has a negative impact on savings in Tanzania.

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Section: Empirical Evidencementioning

confidence: 99%

Empirical Investigation of the Determinants of Tanzania’s National Savings

Epaphra¹

2014

JEDS

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“…Los estudios sobre el ahorro financiero suelen considerar a la tasa de interés como una de las variables determinantes (Ndanshau, 2012;Kasri y Kassim, 2009) pero en este estudio no se ha considerado porque la muestra está conformada por los departamentos del Perú y cada institución financiera aplica la misma tasa pasiva en sus distintas sucursales a nivel nacional.…”

Section: El Modelounclassified

Determinantes de los depósitos de ahorro bancario en el Perú: Un enfoque departamental

Pedraza

Cubas

2020

An. cient. U.N.A.

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ResumenEsta investigación tuvo como objetivo identificar variables que determinan el nivel de los depósitos de ahorro en el sistema bancario en los departamentos del Perú, porque el ahorro se destina a la inversión y la inversión favorece el crecimiento. Para ello, se utilizaron regresiones econométricas del ahorro bancario con respecto al Producto Bruto Interno per cápita, la tasa de inflación, el crédito bancario, el nivel educativo de la población y el acceso al internet. Se trabajó con datos panel correspondiente a los 24 departamentos del Perú en el periodo 2010-2019 bajo el modelo de efectos fijos y el modelo de efectos aleatorios. El modelo de efectos aleatorios fue elegido como el mejor mediante el Test de Hausman. Los resultados arrojaron que el nivel de ahorro bancario departamental está determinado, en sentido positivo, por el Producto Bruto Interno per cápita, la tasa de inflación, el crédito bancario, el nivel promedio de la educación de la población y del porcentaje de hogares que tienen acceso a los servicios de internet. A su vez, la prueba de raíz unitaria aplicada a los residuos, indica que el ahorro bancario departamental está cointegrada en el largo plazo con estas variables identificadas como sus condicionantes. Palabras clave: ahorro; ahorro bancario; ahorro departamental; depósitos departamentales; producto bruto interno per cápita.

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“…Second, was the liberalization of the financial sector that led to a market-based pricing of financial products and assets. In practice, the BOT allowed banks and NBFIs to set own interest rates subject to a maximum lending rate of 31 percent and a 12-month savings deposit rate above the expected inflation rate (Ndanshau & Kilindo, 2016). Notable, lending rates rose as savings declined, leading to the existence of a widened interest rate spread commonly attributed to risks and other factors that bear influence on lending to the private sector in Tanzania.…”

Section: Evolution Of Credit To the Private Sector In Tanzaniamentioning

confidence: 99%

“…When there is an increase in the interest rate, bank loans are raised significantly. The role of interest rates as one of the factors that determine the level of savings has long been recognized, and empirical evidence has supported that (Ibrahim, 2006;Ndanshau & Kilindo, 2016;Tomak, 2013;Azira, 2018;Moussa & Chedia, 2018). The common measure of inflation is annual change in the CPI.…”

Section: Theoretical Frameworkmentioning

confidence: 99%

Macroeconomic Determinants of Private Sector Credit in Tanzania: 1991–2018

Kilindo

2020

Tanzanian Economic Review

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Tanzania has undertaken significant changes that have altered the role of macroeconomic variables in the financial sector during the past three decades. These include deregulation of interest rates, combating inflation and improving macroeconomic performance, and increasing access to credit by the private sector. In this context, our study aims to analyse the impact of macroeconomic variables on bank credit to the private sector using annual data spanning from 1991 to 2018; the period after financial sector reforms. After performing unit root test and co-integration tests, the Vector Error Correction Model (VECM) was applied to establish the dynamic long– run relationship between macroeconomic variables, namely, GDP, the lending rate, inflation and private sector credit. From the results, it can be seen that all these three macroeconomic variables have contributed positively towards bank credit growth in the Tanzanian economy. The co-integration and the error correction model estimation results also suggest that the macroeconomic variables had a long-run relationship with bank credit. The study findings call for policy makers to observe the behaviour of lending rates, inflation and economic growth to enhance credit demand and stimulate investment and growth.

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On Interest Rates and Other Determinants of Financial Savings: An Empirical Investigation in Tanzania

Cited by 7 publications

References 70 publications

Empirical Investigation of the Determinants of Tanzania’s National Savings

Empirical Investigation of the Determinants of Tanzania’s National Savings

Determinantes de los depósitos de ahorro bancario en el Perú: Un enfoque departamental

Macroeconomic Determinants of Private Sector Credit in Tanzania: 1991–2018

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