South African household savings and the influence of financial liberalisation

Household savings performance has been of great interest to researchers as a result of its close association with supporting an environment conducive to investment and economic growth. South African savings rates have been declining with household savings showing a significant deterioration over the past two decades. Policymakers are primarily occupied with investigating methods to encourage savings and control consumption levels. However there remains some ambiguity regarding the variables that impact household savings behaviour. Higher domestic savings can assist with improving South Africa’s GDP growth rate, which has not realised the expected targets in recent years. The Vector Error Correction Model approach was applied to determine the long-run impact of certain variables on the household savings rate and household debt ratio. The study employed annual time series data over the 20-year period 1994 to 2013. Variables that were studied in relation to the household savings rate included youth dependency, elderly dependency, financial liberalisation and financial deepening. The impacts of financial liberalisation and financial deepening were also examined against the household debt ratio. Findings revealed that household savings are negatively impacted by youth dependency. Results for elderly dependency and financial deepening had weak explanatory power on household savings. Financial deepening was found to significantly increase household debt levels whilst the results concerning financial liberalisation were inconclusive for both the household debt and household savings variables.

Grantor dc:publisher

University of Pretoria

Year dc:date.issued

2014

Advisor dc:contributor.advisor

• Birtch, Matthew

• UCTD
• Finance -- South Africa
• Households -- South Africa
• Income distribution -- South Africa
• Quantitative research

Statement dc:rights

• © 2014 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria.

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/2263/45041

OAI identifier oai:identifier

oai:repository.up.ac.za:2263/45041