The impact of interest rates on savings investments in South Africa
Date
2018
Authors
Xaba, Nduduzo
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Abstract
The impact of interest rate on savings and investments has been of great interest to researchers as a result of its close association with supporting an environment conducive to creating a culture of savings and economic growth. South Africa has one of the worst savings culture in the world as savings rates in South Africa deteriorate and is one of the most indebted countries in the world. Policymakers in South Africa are exploring different methods to encourage savings and growing investments resulting which will lead into economic growth. However there still remains some ambiguity with regards to the variables that influence the savings and investment patterns. An increase in domestic savings can aid with the improving of the Gross Domestic Product (GDP) growth rate of the country, which has fallen short of its target over the recent years.
The SPSS software was used to run the simple linear regression as the statistical tool to analyse the correlation between interest rate, savings and investment. The study employed annual time series data over the 10 year period from 2007- 2017. Variables that were studied were interest rate, savings and investment. Our findings revealed that savings are positively impacted by interest rates and that investments are negatively impacted by interest rates.
Description
A research article submitted to the Faculty of Commerce, Law and Management, University of the Witwatersrand, in partial fulfillment of the requirements for the degree of Master of Business Administration
Johannesburg, 2018