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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