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- Title
DETERMINANTS AND ECONOMICS OF HOUSEHOLD SAVINGS IN SOUTH AFRICA.
- Authors
Ralarala, O.; Masipa, M.
- Abstract
This paper investigates determinants of household savings, as participants in the overall economy in South Africa, as well as their role in economic growth. Savings and investment are central to the country's economic growth. Household savings ensure stable levels of consumption during the time of loss of income or pension period. South African national accounts data have not shown enhancement in the household saving ratio from the time when there was Global Financial Crisis. The paper uses autoregressive distributed lags (ARDL) methodology to analyze determinants of household savings; and, it finds that household disposable income and consumption were the most significant determinants of household savings in the long-run. Also, it establishes a direct relationship between household savings and economic vitality. The ARDL error correction model (ECM) estimated a very high speed of adjustment of 65%, meaning that the model will not take long to restore back to equilibrium. The paper hopes to assist the process of devising strategies for improving the South African economy; and, it recommends that appropriate policies be developed and strengthened in order to incentivize household savings, which are, in the long-run, essential for development and economic growth. Furthermore, the paper points out the obvious fact that savings act as a contingency for individuals and countries in the event of economic downturns and financial crisis; and, therefore, that it is in the interest of society to incentivize household savings.
- Publication
Journal of Global Business & Technology, 2021, Vol 17, Issue 1, p26
- ISSN
1553-5495
- Publication type
Academic Journal