Macroeconomic Variables and Savings Accumulation in Nigeria

Abstract

Abstract

This study examined the relationship between macroeconomic variables and savings accumulation in Nigeria from 1996 to 2023. The specific objectives were to ascertain the effects of deposit interest rates, inflation rates, and exchange rates on savings accumulation in Nigeria. The study adopted an ex post facto research design using annual time-series data. Data for the various variables were analyzed using the autoregressive distributed lag method of estimation. From the analysis, the deposit interest rate has a positive but insignificant effect on savings accumulation, as measured by the national savings rate in Nigeria. Also, a 1% increase in the deposit interest rate will result in approximately a 0.06% increase in the national savings rate. Inflation rate has a positive but not significant effect on savings accumulation in Nigeria. In addition, a 1% increase in the inflation rate will result in approximately a 0.08% increase in the national savings rate. The exchange rate has a positive and significant effect on savings accumulation in Nigeria. A 1% increase in the exchange rate will result in approximately a 0.44% increase in the national savings rate. Therefore, the study concludes that the value of her domestic currency affects savings accumulation in Nigeria. The study therefore recommends, among other things, that government at all levels should continually strive to formulate policies that will make Nigeria an exporting nation, not only in crude oil but also in other consumables, so as to boost the value of the naira.