THE DETERMINANT OF SAVINGS IN A DEREGULATED ECONOMY (THE NIGERIAN CASE)
This paper examine the determinants of savings in a deregulated economy in the light of the Nigeria experience during the period 1986-1993 and 1994- 2004. That is during SAP and Post SAP era respectively. The methodology involves the use of survey method for data collection and utilized simple and multiple Regressions for analysis. These techniques were used to test the impact of the SAP policies on savings habit of Nigerians DURING and AFTER SAP era. The study also utilized the correlation analyses to establish the extent and nature of relationship between the following: Real Per Capita Income and Savings; Investment and Saving; Total Domestic credit, Real Interest Rate and Savings; and consumption and savings in a deregulated economy. Secondary data used were from official sources such as central Bank of Nigeria (CBN); Annual Reports, the CBN. Statistical bulletin for various years and Nigeria Deposit Insurance Cooperation (NDIC). Meanwhile, it is found that the saving rate rises with both the level and the rate of growth of deposable income and the magnitude of the impact of the former is smaller than that of the latter. The real interest rate on bank deposits has a significant positive impact, but the magnitude of the pimpact is modest. Also, it was found that the magnitude of the impact and foreign Domestic investment actually contributed significantly to the savings rate of Nigeria’s economy. Consumption on the other hand, did not have significant impact on the savings rate of Nigerians during the period 1986- 2004. Moreover, in the course of the study, it is noticed that public saving seems to crowd out private saving but less than proportionately suggesting that public policy can influence the national saving rate. Among the other variables considered, the spread of banking facilities in the economy seem to have a positive impact on savings and with the Foreign Domestic Investment as proxy for economic liberalisation having a wide impact on the savings habit of Nigerians. We observed that there was a low trend rate of savings during the SAP era as against the positive feedback in Post SAP era. However, government should avoid drastic policy reversal but rather, it should concentrate efforts in fine-tuning the existing policy measures which will not only compel prudence on the part of the major operators in the financial market but also will stimulate savings behaviour of all economic agents. This will go a long way at enhancing funds’ mobilization in the country.