Determinants of Private Domestic Savings in Nigeriam (1970-2010)

Abstract

This study investigated the impact of selected proximate determinants of domestic private savings in Nigeria for the sample period 1970 to 2010. Ordinary least square (OLS) technique and Johansen co integration were used in the empirical analysis. The variables namely, domestic private savings, gross domestic product, money supply, real interest rate, and inflation rate, from the ADF test conducted exhibited random walk process and became stationary after first differencing. All the series were found to be co integrated. The estimated long run regression indicated that all the variables are highly significant determinants of private domestic savings in Nigeria. The recommendation therefore, is that the government should continue to pursue vigorously macroeconomic policies that will positively impact on these selected variables in order to enhance the levels of investment and output, and hence savings in Nigeria.

Keywords: Domestic savings, Financial deepening, Externalities, Autocorrelation, Short-run, Long-run.