Determinants of National Saving in Ethiopia: Time Series Analysis

Edosa Kubsa Lebeta; Debeli Chala Biyena

doi:doi:10.11648/j.ijfbr.20210703.11

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Determinants of National Saving in Ethiopia: Time Series Analysis

Edosa Kubsa Lebeta, Debeli Chala Biyena

Published in International Journal of Finance and Banking Research (Volume 7, Issue 3)

Received: 17 May 2021 Accepted: 9 July 2021 Published: 15 July 2021

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Abstract

In poor countries like, Ethiopia national saving have a vital role for capital accumulation, which facilitate domestic investment and economic growth. Accordingly, this paper mainly investigates the covariate that determines national savings specifically in Ethiopia based on the time series data collected from year 1984-2016E.C. The main objective of the study is to identify trend of and the major covariates that determine national saving in Ethiopia. Five covariates (variables) have employed, namely national saving, real GDP, investment, deposit rate, and inflation rate. Autoregressive distributed lag (ARDL) approach to co-integration and error correction model (ECM) has applied to analyze the long run and short-run relationship between the explained and explanatory variables. The long-run model result revealed that, the Real Gross Domestic Product, investment, deposit rate, and inflation have shown a similar relationship. Accordingly, Real Gross Domestic product, investment, deposit and inflation rate, are significantly and positively correlated with national saving. However, in the short-run, except deposit rate all independent variables affect national saving positively. The error correction term has a coefficient of -100.66 which shows that there will be about 100.66% percent speed of adjustment toward long run equilibrium in each year when there is any imbalance in the short run. Finally, as the model result revealed, national saving responded to the real gross domestic product, investment and deposit rate on the theoretically expected manner, however not for the inflation rate. Then the paper recommends increasing an alternative to enhance performance of national saving by considering its contribution for economic growth and development of Ethiopia.

Published in	International Journal of Finance and Banking Research (Volume 7, Issue 3)
DOI	10.11648/j.ijfbr.20210703.11
Page(s)	67-75
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2021. Published by Science Publishing Group

Keywords

National Saving, ARDL, ECM, and Ethiopia

References

[1]	Abu Girma, (2004), on the determinants of domestic saving in Ethiopia, paper presented on the second international conference on the Ethiopian economy, EEA, Ethiopia.
[2]	Ademe Ayalew. "Determinants of domestic saving in Ethiopia: An autoregressive distributed lag (ARDL) bounds testing approach", Journal of Economics and International Finance, 2013.
[3]	Dayal-Ghulati and Thiman, (1997), saving in South East Asia and Latin America compared: searching for policy lessons, IMF.
[4]	Ethiopian Economics Association, (2001/20012), the annual report on the Ethiopian economy, Addis Ababa, Ethiopia.
[5]	Mankiew, N. G. (2000), Macroeconomics, 2^nd edition, Harvard University.
[6]	Metain Ozcan Kilvicim, (2000), Determinants of national saving in the Arab countries Iran and Turkey Ankar, Turkey.
[7]	Prema Chandra Athukroala, (2003), determinants of national saving in India, Australian national university, Canberra, Australia.
[8]	Said Hallaq, (2003), determinants of national saving in Jordan, Ibid, Jordan.
[9]	Simeneh Zewdu, (2006), Determinants of national investment in Ethiopia, Addis Ababa, Ethiopia.
[10]	Tochukwu E. Nwachukwu and Fastus D. Egwaikhide, (2007), an error-correction model of the determinants of saving in Nigeria, Ibadan University, Nigeria.
[11]	Easterly, William. 2003. "Can Foreign Aid Buy Growth?" Journal of Economic Perspectives, 17 (3): 23-48.
[12]	Muhammad imran khan, jian-zhou teng, muhammad kamran khan, muhammad nauman, arshad ullah jadoon-(2017), determinants of national saving: evidence from south asian countries.
[13]	Joseph basa bose (2020) empirical analysis of the domestic saving behaviour in rwanda. masters thesis.
[14]	Temam gebu and feleke solomon, (2018), determinants of saving among rural households in ethiopia: the case of wolaita and dawro zone, snnpr. international journal of advanced research.
[15]	Vivian nagawa, francis wasswa and edward bbaale, (2020), determinants of gross domestic savings in uganda: an autoregressive distributed lag (ardl) approach to cointegration. journal of economic structures.

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Edosa Kubsa Lebeta, Debeli Chala Biyena. (2021). Determinants of National Saving in Ethiopia: Time Series Analysis. International Journal of Finance and Banking Research, 7(3), 67-75. https://doi.org/10.11648/j.ijfbr.20210703.11

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ACS Style

Edosa Kubsa Lebeta; Debeli Chala Biyena. Determinants of National Saving in Ethiopia: Time Series Analysis. Int. J. Finance Bank. Res. 2021, 7(3), 67-75. doi: 10.11648/j.ijfbr.20210703.11

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AMA Style

Edosa Kubsa Lebeta, Debeli Chala Biyena. Determinants of National Saving in Ethiopia: Time Series Analysis. Int J Finance Bank Res. 2021;7(3):67-75. doi: 10.11648/j.ijfbr.20210703.11

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@article{10.11648/j.ijfbr.20210703.11,
  author = {Edosa Kubsa Lebeta and Debeli Chala Biyena},
  title = {Determinants of National Saving in Ethiopia: Time Series Analysis},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {3},
  pages = {67-75},
  doi = {10.11648/j.ijfbr.20210703.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210703.11},
  abstract = {In poor countries like, Ethiopia national saving have a vital role for capital accumulation, which facilitate domestic investment and economic growth. Accordingly, this paper mainly investigates the covariate that determines national savings specifically in Ethiopia based on the time series data collected from year 1984-2016E.C. The main objective of the study is to identify trend of and the major covariates that determine national saving in Ethiopia. Five covariates (variables) have employed, namely national saving, real GDP, investment, deposit rate, and inflation rate. Autoregressive distributed lag (ARDL) approach to co-integration and error correction model (ECM) has applied to analyze the long run and short-run relationship between the explained and explanatory variables. The long-run model result revealed that, the Real Gross Domestic Product, investment, deposit rate, and inflation have shown a similar relationship. Accordingly, Real Gross Domestic product, investment, deposit and inflation rate, are significantly and positively correlated with national saving. However, in the short-run, except deposit rate all independent variables affect national saving positively. The error correction term has a coefficient of -100.66 which shows that there will be about 100.66% percent speed of adjustment toward long run equilibrium in each year when there is any imbalance in the short run. Finally, as the model result revealed, national saving responded to the real gross domestic product, investment and deposit rate on the theoretically expected manner, however not for the inflation rate. Then the paper recommends increasing an alternative to enhance performance of national saving by considering its contribution for economic growth and development of Ethiopia.},
 year = {2021}
}

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TY  - JOUR
T1  - Determinants of National Saving in Ethiopia: Time Series Analysis
AU  - Edosa Kubsa Lebeta
AU  - Debeli Chala Biyena
Y1  - 2021/07/15
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210703.11
DO  - 10.11648/j.ijfbr.20210703.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 67
EP  - 75
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210703.11
AB  - In poor countries like, Ethiopia national saving have a vital role for capital accumulation, which facilitate domestic investment and economic growth. Accordingly, this paper mainly investigates the covariate that determines national savings specifically in Ethiopia based on the time series data collected from year 1984-2016E.C. The main objective of the study is to identify trend of and the major covariates that determine national saving in Ethiopia. Five covariates (variables) have employed, namely national saving, real GDP, investment, deposit rate, and inflation rate. Autoregressive distributed lag (ARDL) approach to co-integration and error correction model (ECM) has applied to analyze the long run and short-run relationship between the explained and explanatory variables. The long-run model result revealed that, the Real Gross Domestic Product, investment, deposit rate, and inflation have shown a similar relationship. Accordingly, Real Gross Domestic product, investment, deposit and inflation rate, are significantly and positively correlated with national saving. However, in the short-run, except deposit rate all independent variables affect national saving positively. The error correction term has a coefficient of -100.66 which shows that there will be about 100.66% percent speed of adjustment toward long run equilibrium in each year when there is any imbalance in the short run. Finally, as the model result revealed, national saving responded to the real gross domestic product, investment and deposit rate on the theoretically expected manner, however not for the inflation rate. Then the paper recommends increasing an alternative to enhance performance of national saving by considering its contribution for economic growth and development of Ethiopia.
VL  - 7
IS  - 3
ER  -

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Author Information

Edosa Kubsa Lebeta

Economics Department, Bule Hora University, Bule Hora, Ethiopia
Debeli Chala Biyena

Forest and Rangeland Directorate, Ethiopian Biodiversity Institute, Addis Ababa, Ethiopia

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APA Style

Edosa Kubsa Lebeta, Debeli Chala Biyena. (2021). Determinants of National Saving in Ethiopia: Time Series Analysis. International Journal of Finance and Banking Research, 7(3), 67-75. https://doi.org/10.11648/j.ijfbr.20210703.11

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ACS Style

Edosa Kubsa Lebeta; Debeli Chala Biyena. Determinants of National Saving in Ethiopia: Time Series Analysis. Int. J. Finance Bank. Res. 2021, 7(3), 67-75. doi: 10.11648/j.ijfbr.20210703.11

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AMA Style

Edosa Kubsa Lebeta, Debeli Chala Biyena. Determinants of National Saving in Ethiopia: Time Series Analysis. Int J Finance Bank Res. 2021;7(3):67-75. doi: 10.11648/j.ijfbr.20210703.11

Copy | Download

@article{10.11648/j.ijfbr.20210703.11,
  author = {Edosa Kubsa Lebeta and Debeli Chala Biyena},
  title = {Determinants of National Saving in Ethiopia: Time Series Analysis},
  journal = {International Journal of Finance and Banking Research},
  volume = {7},
  number = {3},
  pages = {67-75},
  doi = {10.11648/j.ijfbr.20210703.11},
  url = {https://doi.org/10.11648/j.ijfbr.20210703.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20210703.11},
  abstract = {In poor countries like, Ethiopia national saving have a vital role for capital accumulation, which facilitate domestic investment and economic growth. Accordingly, this paper mainly investigates the covariate that determines national savings specifically in Ethiopia based on the time series data collected from year 1984-2016E.C. The main objective of the study is to identify trend of and the major covariates that determine national saving in Ethiopia. Five covariates (variables) have employed, namely national saving, real GDP, investment, deposit rate, and inflation rate. Autoregressive distributed lag (ARDL) approach to co-integration and error correction model (ECM) has applied to analyze the long run and short-run relationship between the explained and explanatory variables. The long-run model result revealed that, the Real Gross Domestic Product, investment, deposit rate, and inflation have shown a similar relationship. Accordingly, Real Gross Domestic product, investment, deposit and inflation rate, are significantly and positively correlated with national saving. However, in the short-run, except deposit rate all independent variables affect national saving positively. The error correction term has a coefficient of -100.66 which shows that there will be about 100.66% percent speed of adjustment toward long run equilibrium in each year when there is any imbalance in the short run. Finally, as the model result revealed, national saving responded to the real gross domestic product, investment and deposit rate on the theoretically expected manner, however not for the inflation rate. Then the paper recommends increasing an alternative to enhance performance of national saving by considering its contribution for economic growth and development of Ethiopia.},
 year = {2021}
}

Copy | Download

TY  - JOUR
T1  - Determinants of National Saving in Ethiopia: Time Series Analysis
AU  - Edosa Kubsa Lebeta
AU  - Debeli Chala Biyena
Y1  - 2021/07/15
PY  - 2021
N1  - https://doi.org/10.11648/j.ijfbr.20210703.11
DO  - 10.11648/j.ijfbr.20210703.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 67
EP  - 75
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20210703.11
AB  - In poor countries like, Ethiopia national saving have a vital role for capital accumulation, which facilitate domestic investment and economic growth. Accordingly, this paper mainly investigates the covariate that determines national savings specifically in Ethiopia based on the time series data collected from year 1984-2016E.C. The main objective of the study is to identify trend of and the major covariates that determine national saving in Ethiopia. Five covariates (variables) have employed, namely national saving, real GDP, investment, deposit rate, and inflation rate. Autoregressive distributed lag (ARDL) approach to co-integration and error correction model (ECM) has applied to analyze the long run and short-run relationship between the explained and explanatory variables. The long-run model result revealed that, the Real Gross Domestic Product, investment, deposit rate, and inflation have shown a similar relationship. Accordingly, Real Gross Domestic product, investment, deposit and inflation rate, are significantly and positively correlated with national saving. However, in the short-run, except deposit rate all independent variables affect national saving positively. The error correction term has a coefficient of -100.66 which shows that there will be about 100.66% percent speed of adjustment toward long run equilibrium in each year when there is any imbalance in the short run. Finally, as the model result revealed, national saving responded to the real gross domestic product, investment and deposit rate on the theoretically expected manner, however not for the inflation rate. Then the paper recommends increasing an alternative to enhance performance of national saving by considering its contribution for economic growth and development of Ethiopia.
VL  - 7
IS  - 3
ER  -

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