The Implications of Interest Rates on Private Saving with Reference to Myanmar

Abstract

The private saving is one of the fundamentals for economic development and growth of the country. Thus, the main purpose of this paper is to analyze the effect of interest rates on private saving in Myanmar over the period from fiscal year 2013-14 Q1 to 2018 Q2. This study investigates the private saving of Myanmar’s banking sector which includes twenty seven private commercial banks, four State-owned banks and thirteen foreign bank branches. The quarterly data are obtained from secondary data sources collected from quarterly Financial Statistics Bulletin and annual reports of Central Bank of Myanmar, Statistical Year Books and Selected Monthly Economic Indicators published by CSO, Myanmar, as well as websites from commercial banks to investigate the effect of domestic interest rates on private saving. Inferential analysis including multiple regression analysis and correlation analysis as well as descriptive analysis are applied to examine the effect of domestic interest rates on private saving with the use of Statistical Package for Social Sciences (SPSS) software (version 25). The findings of the study reveal that all independent variables except from Treasury bill rate have significant impact on the savings while inflation and fixed deposit rate have adversely impact on savings. Among all independent variables, saving deposit rate is the most influent variable on attracting private saving. Therefore, the study concludes that policies for ensuring to adopt flexible interest rates structures and for maintaining reasonable inflation rate depending upon the macroeconomic conditions of the economy would be critical to mobilize private saving in Myanmar.

Does Interest Rate Really Stimulate Savings in Nigeria?

“…Using a multiple regression analysis and correlation tools, their results divulged that all independent variables have a significant impact on savings but the Treasury bill did not have a significant impact. Their results also revealed that the saving deposit rate is the most influential variable in attracting private savings (Tun et al, 2020).…”

“…The result of the OLS shows that interest rate spread and exchange rate, inflation, savings, interest, and GDP growth rate are statistically insignificant in their effect on savings (Brotoboh, Obeh, 2021). Tun, Mohamed, Alrajawy and Bhaumik (2020) studied the influence of interest rates on private saving in Myanmar between 2013-2014 Q1 and 2018 Q2. Using a multiple regression analysis and correlation tools, their results divulged that all independent variables have a significant impact on savings but the Treasury bill did not have a significant impact.…”