An Empirical Analysis of Savings Determinants in Malaysia

Saving is an important indicator of economic development where it is viewed as an element which finances domestic investment to achieve economic growth. The purpose of this paper is to examine the saving behavior in Malaysia. By using Life Cycle Model setting, this study employs a saving function wh...

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Main Author:	Hafizah, Hammad Ahmad Khan
Format:	Thesis
Language:	eng
Published:	2009
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/3677/1/s801352.pdf
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id	my-uum-etd.3677
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng
advisor	Abdullah, Hussin
topic	HG Finance
spellingShingle	HG Finance Hafizah, Hammad Ahmad Khan An Empirical Analysis of Savings Determinants in Malaysia
description	Saving is an important indicator of economic development where it is viewed as an element which finances domestic investment to achieve economic growth. The purpose of this paper is to examine the saving behavior in Malaysia. By using Life Cycle Model setting, this study employs a saving function which includes per capita income, rate of returns on savings deposit, government fiscal balance, young age dependency rate, old age dependency rate and also inflation rate as the potential determinants of saving. The empirical analysis is based on time series data for 30 years for period 1978 to 2007. The model tested for long run relationship using Johansen and Juselius multicointegration approach shows that per capita income, rate of returns, old age dependency and inflation rate are the determinants of national savings while per capita income, rate of returns, government fiscal balance, young age dependency, old age dependency and inflation rate are the determinants for private saving in a long run. On the other hand, results based on Vector Error Correction Model (VECM) show that per capita income, government fiscal balance and young age dependency are the significant determinants of national saving in a short run while private saving determinants are found to be per capita income, rate of return and young age dependency. Furthermore, variable ECM which indicates the speed of adjustment, shows that more than 75% of the adjustment is completed in a year for national saving determinants, while more than 86% of the adjustment is completed in a year for private saving determinants. Results obtain in this study suggest that policymakers should keep an eye on all of the significant variables since they give impact on savings rate.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Hafizah, Hammad Ahmad Khan
author_facet	Hafizah, Hammad Ahmad Khan
author_sort	Hafizah, Hammad Ahmad Khan
title	An Empirical Analysis of Savings Determinants in Malaysia
title_short	An Empirical Analysis of Savings Determinants in Malaysia
title_full	An Empirical Analysis of Savings Determinants in Malaysia
title_fullStr	An Empirical Analysis of Savings Determinants in Malaysia
title_full_unstemmed	An Empirical Analysis of Savings Determinants in Malaysia
title_sort	empirical analysis of savings determinants in malaysia
granting_institution	Universiti Utara Malaysia
granting_department	College of Business (COB)
publishDate	2009
url	https://etd.uum.edu.my/3677/1/s801352.pdf
_version_	1747827624261976064
spelling	my-uum-etd.36772014-01-02T01:31:28Z An Empirical Analysis of Savings Determinants in Malaysia 2009 Hafizah, Hammad Ahmad Khan Abdullah, Hussin College of Business (COB) College of Business HG Finance Saving is an important indicator of economic development where it is viewed as an element which finances domestic investment to achieve economic growth. The purpose of this paper is to examine the saving behavior in Malaysia. By using Life Cycle Model setting, this study employs a saving function which includes per capita income, rate of returns on savings deposit, government fiscal balance, young age dependency rate, old age dependency rate and also inflation rate as the potential determinants of saving. The empirical analysis is based on time series data for 30 years for period 1978 to 2007. The model tested for long run relationship using Johansen and Juselius multicointegration approach shows that per capita income, rate of returns, old age dependency and inflation rate are the determinants of national savings while per capita income, rate of returns, government fiscal balance, young age dependency, old age dependency and inflation rate are the determinants for private saving in a long run. On the other hand, results based on Vector Error Correction Model (VECM) show that per capita income, government fiscal balance and young age dependency are the significant determinants of national saving in a short run while private saving determinants are found to be per capita income, rate of return and young age dependency. Furthermore, variable ECM which indicates the speed of adjustment, shows that more than 75% of the adjustment is completed in a year for national saving determinants, while more than 86% of the adjustment is completed in a year for private saving determinants. Results obtain in this study suggest that policymakers should keep an eye on all of the significant variables since they give impact on savings rate. 2009 Thesis https://etd.uum.edu.my/3677/ https://etd.uum.edu.my/3677/1/s801352.pdf text eng validuser http://lintas.uum.edu.my:8080/elmu/index.jsp?module=webopac-l&action=fullDisplayRetriever.jsp&szMaterialNo=0000774783 masters masters Universiti Utara Malaysia Agrawal, P. (2001). The relation between savings and growth: Cointegration and causality evidence from Asia. Applied Economics, 33(4), pp. 499-513. Ang, J.B. (2008). Financial Development and Economic Growth in Malaysia. London: Routledge, forthcoming. Ang, J.B. and McKibbin, W.J. (2007). Financial Liberalization, Financial Sector Development and Growth: Evidence from Malaysia. Journal of Development Economics 84, pp. 215-233. Athukorala, P. and Sen, K. (2004). The Determinants of Private Saving in India. World Development, Vol. 32(3), pp. 491-503. 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An Empirical Analysis of Savings Determinants in Malaysia

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