POLICY RECOMMENDATION: THE IMPACT OF PRIVATE DOMESTIC SAVINGS ON NIGERIA ECONOMIC GROWTH (1980-2009)



CHAPTER FOUR
4.0       PRESENTATION AND ANALYSIS OF RESULTS
            The attempt to study the impact of private domestic savings on Nigerian economic growth from 1980-2009, led the researcher to subject the data collected to regression analysis.
4.1       PRESENTATION OF RESULT FROM MODEL 1
Table (4.1)
variables
coefficient
Std. error
t. statistic
C
1.057964
0.786046
1.345932
Log(TPS)
0.718242
0.077949
9.214245
Log(ITR)
0.188995
0.323663
0.583924
LogPRY)
0.336653
0.121560
2.769431
R2 = 0.953909

F – value = (4,26) 179.3653)
Dw – ratio = 2.122052
            From the result above, the coefficient of real Gross Domestic product (RGDP) shows positive relationship with the total private saving (TPS). This is in line with our expectation assumption. This implies that an increase in total private saving in the economy will increase the Real Gross Domestic Product by 0.7182 percentage. However, from the statistical point of view this variable (ITR) is statistical significant to their study since  its t-statistic computed is greater than the critical value from statistical table at 5 percent level of significant (1.699). The coefficient of interest Rate (ITR) shows a positive relationship with the Real Gross Domestic Product (RGDP). It is also in line with the theoretical apiror assumption. This implies that a percentage increase in interest rate to deposit money at commercial bank will increase the level of saving which in turn, influence or increase the level of Real Gross Domestic Product in the economy through investment. Thus, from statistical point of view, interest rate shows statistically significant to the study, since its t-computed is greater than zero (0.188995)
            Finally, the coefficient of per capita income (PRY) shows positive relationship with the Real Gross Domestic Product. From the prior assumption, it expected that increase in per-capita income of any economy or country influence or impact positively to the (RGDP), therefore it is in order of its expectation. The implication is that, if one percent increase in per-capital income (PRY) will finally reduced poverty level of the country thereby increasing level and rate of saving which in turn impact positively to the real Gross Domestic Product use as the measure of economy growth variable.
            Meanwhile, the coefficient of determination (R2) stood at 0.953909, rank very high. This implies that the variables chosen for determination of private domestic saving explain or account 95% influence or movement on real Gross Domestic Product as a measure of economy growth, while 5 percent only account could be explain by other variables or factors not included in the model.
            The f-value computed stood at (4,26) = 179.3653 which is group influence of all the independent variables to dependent variables is very strong statistically significant to the study. Since is greater than f-tabulated at 5% level of significant by (4.22).
            Finally, the D.W ratio is 2.122 shows positive presence of auto correlation among the variables in the model.
4.2       TEST OF HYPOTHESIS
Table (4.2)
variables
t-computed
t-tabulated
Observation
Decision
TPS
9.214245
1.699
T-com>T-tab
Reject Null
ITR
0.583924
1.699
T-com<T-tab
Accept Null
PRY
2.7694
1.699
T-com>T-tab
Reject Null
 From the table above, it shows that the T-computed of Total Private Domestic Saving is greater than the T-tabulated at 5 percent level of significant. Therefore, we reject the null hypothesis that say that private domestic saving has no significant effect on economic growth in Nigeria and accept the alternative hypothesis and concluded that private domestic saving has significant effect on economic growth in Nigeria during the period of observation. Thus the t-computed of interest rate (ITR), is less than the critical value at 5 percent level of significant. Therefore, we accept the null hypothesis and reject the alternative. However, the t-computed of per-capital income is greater than the t-tabulated, we reject the null hypothesis and conclude that private domestic saving has significant impact on Real Gross Domestic Product which is the measurement of economic growth   

CHAPTER FIVE
SUMMARY, CONCLUSION AND POLICY RECOMMENDATIONS

5.1       SUMMARY OF FINDINGS
            This research work evaluated the impact of private domestic savings on the Nigeria’s economic growth from 1980-2009.
            The researcher used TPS per capita income as proxy for domestic savings as well as proxied RGDP for economic growth. Using ordinary least square techniques, the following findings or observations sufficed.
1)        Private domestic savings have significant impact on the Nigerian economy. (O. 945890)
ii)        The entire regression plane is statistically significant. This means the joint influence of the explanatory variable (TPS, PCY, and ITR is statistically significant).
iii)       The computed coefficient of determination (R2) shows that 95.39% of the total variations in the dependent variable (GDP), is influenced by the variation in the explanatory variables namely Per Capital Income (PCY), Total Private Savings (TPS) and Interest Rate (ITR)
iv)       The total variation of 4.61% in the dependent variable is attributable to the influence of other factors not included in the regression model.
v)        There is no evidence of positive first order serial correlation.
5.2       CONCLUSION
            From the findings of the study, the following can be inferred.
i.          Per capita income (PCY) has a small positive impact on the size of saving in Nigerian economy. This suggests that- PCY, representing average income of Nigerian, is still very low, because of abject poverty.
ii.         Total private savings (TPS) has a positive impact on GDP. This stems from the fact that-domestic savings stimulates GDP through investment.
iii.       Interest rate equally has a positive impact on the economic growth in Nigeria, because, it encourages savings which could be used for investment.
            Hence, in the era of an ever-changing global economic environment, especially now that the current economic approach of most countries is gearing towards transforming their system for rapid and sustained economic growth, Nigeria cannot be left out. Thus, this research work examines the impact of private domestic savings on the Nigeria’s economy within the period under study; 1980-2008.
            It is discovered from the study that increase in per capita income of the populace is very crucial- as it leads to savings mobilization that could as well imbuse GDP through investment
5.3       POLICY RECOMMENDATIONS
            In the light of the researcher’s finding, the following recommendations are presented;
i.          The CBN should exercise policy influence that would affect the behavior of private sector toward saving; namely balance money demand function (M2), interest rate that will attract saving and also encourage investment since saving theoretical, is equal to investment, banks credit etc. in the overall liquidity of the economy.
ii.         In the bid to achieve economic growth, monetary authority in Nigeria should apply discretion in implementing same of their policies in order to favour private sector investment (saving) especially the agricultural sector, small scale industries.
Iii        Monetary policy should be used to fight against high rate of inflation in the country because it is one of the factors that discourage saving and investment in the economy.
Iv         Government should strive to strengthen the financial system for easy implementation of monetary policy and reliability of individuals on their financial value and stand in the economy.

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