6 research outputs found

    Interest Rates and Financial Savings in Tanzania: 1967 - 2010

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    This paper investigates responsiveness of financial savings to real interest rate and other determinants in Tanzania during the period 1967-2010. Both OLS method and dynamic error correction model (ECM) approaches were employed in the time series data analysis. The regression results shows that real interest rate exerts a statistically significant and positive short-run and long-run effect on financial saving in Tanzania. Moreover, both contemporaneous and two-period lagged real interest rate has the expected significant positive effect on financial saving. Unexpectedly, the results show that the effect of both nominal interest rate and inflation on saving is positive as predicted in theory. Among other determinants of saving, the effect of real income per capita is significant and positive as expected but not that of financial development. Several robustness tests confirmed the estimated sign and sensitivity of financial savings to the real and nominal interest rates during the sample period. Among others, the results are in support of the interest rates liberalization policy and real interest rate strategy used to enhance saving in Tanzania

    Interest Rates and Financial Savings in Tanzania: 1967 - 2010

    Get PDF
    This paper investigates responsiveness of financial savings to real interest rate and other determinants in Tanzania during the period 1967-2010. Both OLS method and dynamic error correction model (ECM) approaches were employed in the time series data analysis. The regression results shows that real interest rate exerts a statistically significant and positive short-run and long-run effect on financial saving in Tanzania. Moreover, both contemporaneous and two-period lagged real interest rate has the expected significant positive effect on financial saving. Unexpectedly, the results show that the effect of both nominal interest rate and inflation on saving is positive as predicted in theory. Among other determinants of saving, the effect of real income per capita is significant and positive as expected but not that of financial development. Several robustness tests confirmed the estimated sign and sensitivity of financial savings to the real and nominal interest rates during the sample period. Among others, the results are in support of the interest rates liberalization policy and real interest rate strategy used to enhance saving in Tanzania

    Relationship Between Inflation and Real Economic Growth in Rwanda

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    peer reviewedThis study examines the impact of economic stability measures (inflation and unemployment rates) on real gross domestic product (GDP) in Rwanda. It uses quarterly data for the period of 2000Q1–2015Q4 collected from the Ministry of Finance and Economic Planning, Central Bank of Rwanda and the National Institute of Statistics of Rwanda (NISR). This study concludes that inflation and unemployment have a long-run negative and significant relationship on real gross domestic product. In the long run, the coefficients are not significant at the 5% level; it is only the inflation coefficient and error which are significant. Real gross domestic product increases when inflation reduces with a p-value of 0.00266; real gross domestic product increases when unemployment reduces with a p-value of 0.09882. The coefficient from the error correction model means that the effect of the shock will reduce by 0.0483% each quarter, meaning that the effect of the shock will reduce by 19.32% in each 4th quarter. This further means that it will end at 20 quarters, that is, after a five-year period. It has to be highlighted that there is a weak relationship between real gross domestic product and both inflation and unemployment rates
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