DETERMINANTS OF HOUSEHOLD SAVINGS IN NIGERIA
The study investigated the determinants of household saving in Nigeria utilizing OLS estimation technique using annual time series data between 1970 and 2014. While level of income appears to be the centrepiece of most theories on determinants of household saving in the literature. The empirical results as reported in the context of this study given the period under consideration rather indicate financial development and social security payment as significant and main determinants of household saving in Nigeria. What this portends economically is that household saving culture can be effectively enhanced via competent financial development system coupled with viable social security financing. To this end, policies that seek to improve saving culture of Nigerian household should focus on promoting a competence and an efficient financial system. Secondly, a corrupt free expansion of government finance of social security payment is recommended since it has tendency of improving welfare, income level and consequently the saving rate.
Saving anywhere in the world remains one of the most important types of household‘s economic activities. To this end therefore, an adequate supply of domestic and/or household saving remains a core national policy objective; mainly due to its direct impact on growth process as well as its role as domestic investment stimulants. Rehman, Bashir and Faridi (2011) and Ogbokor and Samahiya (2014) further reaffirms the inevitability of saving in the economy by stressing the fact that, higher savings rate is crucial for long term investment process, which in turn manifest into industrialization that breeds; employment opportunities and economic development. Given the increasing integration of international financing for instance, it is high domestic saving that can ensure macroeconomic stability internally. This postulations of positive influence of savings on investment and subsequently growth and development is an indication that savings matters for growth and development anywhere in the world.
Ironically however, it is the dismal household saving record in most African countries relative to other regions of the world that have been of concern to economists in the recent time. Despite the increasing trend of national domestic savings in Nigeria, the country is yet characterized with low investment and output growth thus, suggesting that her average saving rate ratio is still far from being impressive. Reaffirming this poor state of saving –investment and output relationship is Iyoha (1998), who attributes the mid-1980s negative output growth rate host of factors but mainly to decline in investment and savings. In a similar development, Nnanna (2003) also posited that the underdevelopment state of the Nigerian economy is due to her poor savings and in investment culture. Basically, there is lack of incentives to household savings in Nigeria mainly due to: (i) lack or poor understanding of household savings determinants; and (ii) high saving mobilization cost in terms of the transaction costs involved and also the cost of overcoming the information asymmetry related to ensuring savers are convinced of postponing their consumption to a future date.