The Determinants of Household Savings in South Africa

Simleit, C.; Keeton, Gavin; Botha, Ferdi

doi:10.1080/10800379.2011.12097228

Cited by 13 publications

(9 citation statements)

References 9 publications

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“…Mahlo (2011) discuses that lack of selfcontrol which hinders household savings can distort the behaviour of savings as predicted by theory as some situations are more conducive to savings than others, at ceteris paribus. In the South African context, Simleit, Keeton and Botha (2011) as well as Linde (2011) also found that income and household savings are negatively related. Prinsloo (2000) further supports this by proposing that household savings behave counter-cyclical in South Africa.…”

Section: Vector Error Correction Model (Vecm) 53mentioning

confidence: 91%

“…Whilst the substitution effect describes that an increase in interest rate will increase savings as a consumer forgoes current consumption for more future returns, the income effect is for the idea that an increase in interest rate will lead to reduced savings as consumers will be expecting increased incomes in the future. Studies such as Callen and Thimman (1997); Dirschmid and Glatzer (2004) as well as Athukorala and Tsai (2010) support the substitution effect whilst Loayaza et al (2000); Aron and Mullerberg (2000) and Simleit et al (2011) support the income effect. Some studies for example Schmidt-Hebbel et al (1992) and Chen (2002) however find no relationship between savings and interest rate altogether.…”

Section: Literature Reviewmentioning

confidence: 98%

“…Results of the study indicate a positive coefficient signifying positive relationship whereby a unit increase in RIR will lead to an increase in HSR by 2.090 units. In the South African context, although Aron and Mullerberg (2000) as well as Simleit et al (2011) found a negative relationship, Mahlo (2011) discovered a positive relationship.…”

Section: Vector Error Correction Model (Vecm) 53mentioning

confidence: 98%

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Determinants of Household Savings in South Africa: An Econometric Approach (1990-2011)

Precious¹,

Tsegaye²

2014

MJSS

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This paper examines the determinants of household savings in South Africa over the period . Based on the life cycle hypothesis upon which the study is based as well as empirical literature, particular attention is paid to the effects of age dependency ratio, the level of household income, inflation and real interest rate on household savings. The study employs the Augmented Dickey-Fuller and Phillips Perron unit root tests to test for stationarity in the time series. The Johansen cointegration and the Error Correction Mechanism are employed to identify the long-run and short-run dynamics among the variables. The results of the study reveal that contrary to a theoretical expectation, the level of income and household savings are negatively related, implying that South African households do not only save but increasingly rely on debt to finance their spending. On the other hand age dependency ratio, inflation and real interest rate have positive long run relationships with household savings rate. The study recommends that the government should embark on counter-cyclical fiscal policy to avoid the development of excessive current account deficits during periods of more rapid economic growth, rising investment and falling saving.

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Section: Vector Error Correction Model (Vecm) 53mentioning

confidence: 91%

Section: Literature Reviewmentioning

confidence: 98%

Section: Vector Error Correction Model (Vecm) 53mentioning

confidence: 98%

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Determinants of Household Savings in South Africa: An Econometric Approach (1990-2011)

Precious¹,

Tsegaye²

2014

MJSS

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“…Despite these benefits, households’ lack of saving is among the leading challenges for many developing economies. Simlet et al (2011) argued that low savings act as a barrier to economic growth and development and put pressure on the country’s current account. Compared with the last decade, Tanzanians have been saving at a decreasing rate (FinScope, 2013, 2017).…”

Section: Introductionmentioning

confidence: 99%

Determinants of individual savings among Tanzanians

Mori

2019

RBF

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Purpose Savings help to provide for future personal and households needs. The purpose of this paper examined Tanzanians’ determinants of saving. It studied the relationship between individual characteristics (gender, marital status, age, education level and financial education) and saving behaviour. Design/methodology/approach The paper used 2017 national baseline survey data with 8,959 observations from all over Tanzania. Descriptive analysis and econometric models were used to test the developed hypotheses. Findings Descriptive results show that Tanzanians mainly associate saving with setting money aside to keep it safe for future use. The results also show that most Tanzanians keep their money at home – a very informal way of saving. The results indicate that age and education level are key characteristics that determine positive saving by Tanzanians. Research limitations/implications This study used FinScope survey data which was limited to Tanzania. Since FinScope surveys are done in other African countries, using similar methodologies, it would be interesting to investigate similar trends in other contexts. Practical implications The study recommends promoting awareness of saving in formal institutions. This will benefit not only customers but the financial institutions and mobile telecom companies themselves. Originality/value This study contributes to the life-cycle theory by showing how families, societies and exposures influence individuals to save. Gender and marital status seem to play a lesser role than social- and exposure-related aspects of age and education. Exposure and social interactions are key determinants in the attitude to saving.

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“…Th e second group consists of scholars who fi rmly reject the proposition that increased income exerts a positive impact on savings (see for instance, Chipote & Tsegaye, 2014; Simleit et al, 2011). In their paper, Chipote and Tsegaye (2014) used time series annual data covering 1990-2011 and applied the Johansen co-integration and the error correction mechanism for South Africa.…”

mentioning

confidence: 99%

Determinants of Savings in Urban and Rural Households: Case of South Africa

Zwane

2021

Demogr. soc. ekon.

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Savings have been described as a significant fi nancial and economic matter and represent an essential driving force of economic growth and development. Despite this, many studies investigating the determinants of savings in South Africa have looked predominantly at the drivers of savings only at a national level, without focusing on urban and rural differences. This is critical as these localities are structurally different, with different characteristics. It is, therefore, likely that the determinants of savings in these unique geographical localities would differ, given the negative impact of past policies of marginalisation. The purpose of this paper is to examine the urban-rural disparities in savings for South African households. We used data sourced from the five waves of the National Income Dynamics Study (NIDS) observed from 2008-2017. The novelty of this study is in its application of a novel two-stage least square estimation technique which addresses possible endogeneity problems which might have plagued previous studies in this field. It was concluded from the research that the determinants of savings are different across samples (urban and rural). We found that having access to land is an important predictor of savings in rural areas where the poor live (positive and significant), but the coefficient is not significant in the urban sample. Although there was a positive correlation between income and savings across samples, but the income impact on savings is higher in absolute values for households residing in rural areas, compared to household living in urban areas. We also found that, despite the coefficient of employment being similar in the direction of the impact (positive and significant) across the samples, the magnitude of the coefficient was stronger in the rural sample. Based on the higher magnitude of the coefficient, we found that household size has more effect in urban than rural areas. The study recommends that government should design and implement policies that foster job creation, even low-skilled jobs, which will generate more income and reduce unemployment.

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The Determinants of Household Savings in South Africa

Cited by 13 publications

References 9 publications

Determinants of Household Savings in South Africa: An Econometric Approach (1990-2011)

Determinants of Household Savings in South Africa: An Econometric Approach (1990-2011)

Determinants of individual savings among Tanzanians

Determinants of Savings in Urban and Rural Households: Case of South Africa

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