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

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dc.contributor.authorNdanshau, Michael O. A.
dc.date.accessioned2016-05-06T14:16:56Z
dc.date.available2016-05-06T14:16:56Z
dc.date.issued2012
dc.description.abstractThis paper investigates determinants of financial saving in Tanzania during the period 1967- 2010. Both OLS method and dynamic error correction (coitegration) model (ECM) approaches were employed to test the hypothesis that the interest rate elasticity of financial savings was positive during the study period. The regression results rejected the hypothesis that the interest rate of financial savings was negative and statistically insignificant for the period 1967-1986, a period that was characterised by staunch Government regulation and control of the financial sector. Also unexpectedly, the results rejected the hypothesis that the interest rate elasticity of financial savings was positive during the period 1987-2010, a period that was characterized by market determined interest rates. The results also showed a decrease in absolute size of the real interest rare elasticity of financial savings over the two sub-sample period. Several robustness tests confirmed the estimated sign and sensitivity of financial savings to real interest rates for both sub-sample periods. The results, however, are inconsistent with the traditional theory and therefore demands for further empirical investigation.en_US
dc.identifier.citationNdanshau, M.O., 2012. On Interest Rates and Other Determinants of Financial Savings: An Empirical Investigation in Tanzania. Available at SSRN 2142356.en_US
dc.identifier.urihttp://hdl.handle.net/20.500.11810/1878
dc.language.isoenen_US
dc.subjectFinancial liberalizationen_US
dc.subjectFinancial savingen_US
dc.subjectReal interest rateen_US
dc.subjectFinancial deepeningen_US
dc.subjectInterest rate spreaden_US
dc.subjectCointegration and error correction modelen_US
dc.titleOn Interest Rates and Other Determinants of Financial Savings: An Empirical Investigation in Tanzaniaen_US
dc.typeWorking Paperen_US
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