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Nigeria Journal of Management Sciences (NJMS), Benue State University

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Savings as a Predicator for Sustainable Economic Growth in Nigeria

Dr. Samuel O. Ominyi: (

Inalegwu Emmanuel Okoh: ( Department of Economics, Benue State University, Makurdi


The Marginal Propensity to Save (MPS) is the non-unitary coefficient in a bi-variate savings-national income model which measures the proclivity of the population to savings. The research set out to determine its value in Nigeria and what that portends for economic growth as savings forms the basis for capital accumulation and hence investment. The study covers the period 1986-2015. The research adopted the Vector Error Correction Model (VECM) in ascertaining the relationship between gross domestic product (GDP) and private savings (SAV) including other relevant exogenous variables in the model namely PCE, CCPS, INR and GFCF. The results showed a positive relationship between GDP and SAV and that a percent change in SAV would result in an 8.29% change in GDP. The sign of the coefficients of INR, GFCF and CCPS on a priori were wrong. The OLS methodology was adopted to determine the MPS and the result showed that in the period of the study, the MPS had a value of 0.12 indicating a low savings culture in the country. The research recommends that government through the Central Bank of Nigeria (CBN) adopt policies that ensure accountability of the Deposit Money Banks (DMBs) in their business practices as it concerns the banked populace which will promote trust and a greater predilection to save and also addressing the macroeconomic issues bedevilling the country such as a high rate of unemployment and persistent increases in price which already puts a great strain on the already low incomes of most Nigerians.

Key words: Marginal Propensity to Save, Economic Growth, Multiplier, Nigeria Economy.

To get access to the full text of this article: Faculty of Management Sciences, Benue State University, Makurdi, Nigeria.

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