Title Page………………..i




Table of content……...…v



    1.2 statement of the problem 

    1.3 research questions 

    1.4 Research Hypothesis  

    1.5 hypothesis testing 

    1.6 Methodology  

    1.7  Method of Data Analysis of Statistical Method or Econometric Method Using E-view 

    1.8  plan of the study 


    2.1       introduction 

    2.2  measures  and  determinants  of  savings  mobilisation 

2.3 fiscal policy and savings mobilisation in nigeria  

    2.4 monetary policy and savining mobilisation in nigeria  

2.5 economic growth and savings mobilisation 

    2.6 problems of savings mobilisation 

   2.7 theoretical framework 


3.0 Introduction  

3.1 The Model  

3.2 Model Specification  

3.3 Method of Evaluation  

3.4 Estimation Procedure  

3.5 Data Required and Sources  

3.6 Justification of The Model  


4.1 introduction 

4.2 data presentation for regression model 

4.3 Analysis and Discussions of Results 

4.4 Economic Apriori Criteria:  

4.5     Statistical Criteria (First Order Test)  

4.5.1   Coefficient of Multiple Determinants (R2) 


5.1 Summary of Findings 

5.2 conclusion 

5.3 policy recommendation 

Appendix i 

Appendix ii 




      An  economy  whether  developing  or  developed  is  out  to  achieve  certain 

objectives  which  include  growth  in  the  gross  domestic  product,  reduction  in 

the relit of inflation and unemployment, favorable balance of payment, and long 

term Socio-economic  development.  The  growth  of  output  of  any  economy 

depends  on Capital  accumulation;  and  capital  accumulation  requires 

investment  and  an equivalent  amount  of  saving  to  match  it.  Two  of  the  most 

important issues in development economics, and tor developing countries, are 

how to stimulate investment, and how to bring about an increase in the level of 

saving  10  fund increased  investment.  To this  end.  many  less  developed 

countries'  government have  made  it  a  point of  duties  to  ensure  proper 

mobilization of  domestic  funds  by manipulating  both  fiscal  and  monetary 

policy as a tool to achieve their set objectives 

      For  many  countries,  financial  sector  and  balance  of  payment 

liberalizations  have broadened  access  to  foreign  capital  to  finance  domestic 

investment.  However, many  developing  economies,  in  part  because  of  their 

high  level  of  external indebtedness  cannot  benefit  from  foreign  sources  of 

capital. For men. domestic savings remains the main source of funds to finance 

development and to promote economic growth. However, due to low income 

per  head  in  less  developed countries,  a  perception  that  poor  people  are  too 

poor  to  save  has  been  prevailing for  a  long  time  and  most  financial 

institutions still do not cater to this type of clients.  It  is clear that poor 

ce  of savings and  lapping 

into that source  of funds  is essential However  in  mobilization  of  saving, 

determinants such as income level, interest rates, economic growth level, inflation 

rate, fiscal balance, external debt, among other have come to play important roles. If 

developing  economies  are  to  promote savings  for the  financing  of  investment,  its 

determinants must be clearly identified, Until recently, financial development was 

assumed  to enhance  the  saving rate.  It consists of  elimination  of  credit  ceilings, 

interest rate liberalization, easing of entry for foreign financial institutions, enhanced 

prudential  guidelines  and  supervision, and  the  development  of  capital markets. 

Loayza  and  Shankar  (2000)  find  that financial development has led  the private 

sector  to  increase  the  durable goods component of  their  assets. the effect of 

financial development  on saving  rates can be  separated into a  direct short-run 

impact,  which  is usually negative,  and  an indirect  long-run impact, which is 

generally positive (See Loayza et al, 2000). However, whether increased financial 

development itself significantly increases overall propensity to save depends on me 

extent of substitution between financial saving and other items in the household's 

asset  portfolio. Consequently, the expected signs of  this  relationship in  the 

private saving function are ambiguous (Athukora) and Sen, 2004). 

      This  study attempts to  determine  the effects  of  fiscal and  monetary 

policies on saving mobilization in Nigeria. It also attempts to find influence 

of other Macroeconomics variables  on  both  domestic  and mobilization as  a 

means of attaining economic growth and development  


      Savings,  a  necessary  engine  of  economic  growth  has  been  very  low  in 

Nigeria, Gross  Domestic  Savings  as  a  percentage  of  GDI1 in  less  developed 

countries  has been  low;  between  1980  and  2001,  it  averaged  6,4%  in 

Ghana,  37.4%  in Botswana, 2!.4% in Cameroon, 21.6% in Nigeria, 13.9% in 

Kenya and 7.3% in Malawi (WDTS 2003), He apparent low savings in Nigeria 

has  been  due  to  a combination  of  micro  and  macroeconomic and  political 

factors  such  as  high  level of  poverty,  low  income  per  head,  high  level  of 

unemployment,  inefficient  financial institutions,  and  many  more.  In  order  to 

overcome  the  problem  of  low  savings  in Nigeria, various monetary  and fiscal 

policies  have  been  pursued  over  the  years  but these  have  no!  yielded  the 

required results 

      The objectives of monetary policy since 1986 have remained the same as 

in  the earlier  period - the  stimulation of  output  and  employment,  and  the 

promotion of domestic and external stability. In line with the general philosophy 

of  economic  management  under  SAP,  monetary'  policy  was  aimed  at  inducing 

the emergence of a market-oriented financial system for effective mobilization 

of financial savings and efficient resource allocation. The main instrument of 

the  market-based framework  is  the  open market operations.  This  is 

complemented  by  reserve requirements and  discount  window  operations.  The 

adoption of a market-based framework such as OMO in an economy that had        

macroeconomic. legal term regulatory environment 

    .  Fiscal policy is therefore a government policy that attempts to influence the 

    direction of the economy through changes in government spending (expenditure) or 

    taxes  or  simply  put.  fiscal  policy  refers  to  the  overall  effect  of  the  budge! 

    outcome on economic activity. With the other main type of economic policy, like 

    the  monetary  policy  which  attempts  to  stabilize  the  economy  by  controlling 

    interest rates and the supply of money, budgetary actions that raise the growth of 

    government  expenditures,  reduce  the  growth  of  revenues  and  either  increase  the 

    deficit  or  reduce  the  surplus  are  the  sort  of fiscal  policies  that tend  to  stimulate 

    short-term  growth  and  capital  formation  through  savings mobilization in  the 

    economy.  Actions  that  reduce  expenditures;  increase  government  revenues  and 

    shrink  the  deficit  or  increase  the  surplus  tend  to  dampen  short-term  economic 

    growth.  The  three  possible  stances  of  fiscal  policy  are  neutral,  expansionary  and

      Contractionary: A neutral stance of fiscal policy implies a balanced budget where 

    G  =  T  (Government  spending - Tax  revenue).  An  expansionary  stance  of  fiscal 

    policy  involves  a  net  increase  in  government  spending  (G > T)  through EL rise  in 

    government  spending  or  a  fall  in  taxation  revenue  or  a  combination  of  the  two. 

    Contractionary  fiscal  policy  (G <  T)  occurs  when  net  government  spending  is 

    reduced either through higher taxation revenue or reduced government spending or 

    a combination of the two. The findings of this study will provide answer to these 

    and many more questions that would be raised in the count of the study. 


    This research question was asked and answered: 

        1. What are the fiscal and monetary policies that can be used to enhance 

            savings mobilization for investment purpose?  

        2. What are the key variables explaining effective mobilization of savings? 

        3. What arc the problems encountered in the process of taxing mobilization? 

        4. What policy option have been formulated to correct these problems and to 

            sustain savings mobilization process? 

    1.4 Research Hypothesis  

           To effectively achieve the above mentioned objectives we adopt a null hypothesis:  

    HO:  The  monetary  policy  instrument  does  not  have  significant  impact  on National 


    HI: The monetary policy instruments have significant impact on National Savings 


    HYP. 1  HQ: The monetary  policies do not have significant   

                        effect on national savings 

                  HI: The monetary  policies have significant effect on  

                      national savings 

    HYP. 2  HQ: The  fiscal policies do not have significant   

                        effect on national savings 

                  HI: The  fiscal policies have significant effect on  

                      national savings 

    1.6 Methodology  

             This  aspect  of  the  research  work  aims  at  giving  detailed  information  about  the

    method used in  gathering relevant  and useful data for the study.  Basically, the methods

    used  in  this  research  work  are  analytical.  The  work  is  based  on  data  collected  from

    secondary  sources  such  as  Statistical  Bulletin  of  Central  Banks  of  Nigeria  (CBN)  and

    annual reports of Nigerian Deposit Insurance Corporation (NDIC). The data collected are

    in form of statistical data and tables which are analyzed to arrive at a conclusion. 

    1.7  Method of Data Analysis of Statistical Method or Econometric Method Using 


          To  be  able  to  exhaust  the  subject  matter  of  this  study  that  is,  the  effects  of 

    fiscal and monetary policies on savings mobilization in Nigeria, the study will cover 

    the period of 1981 to 2013. The finding(s) of this study will only be limited, consistent    and applicable to Nigerian economic system. 


            Domestic  resources  serve  as  a  vital  engine  of  growth  and  poverty 

    reduction. However,  the  effective  mobilization  of  domestic  resources  depends  on 

    an  efficient and  well  developed  financial  market  Capital  formation  is  a 

    prerequisite for development. However, in Third World countries the inadequacies 

    of the financial systems often prevent the accumulation of financial resources. These 

    systems  need to fulfill  their  role  as  agents  between  (abundantly  available) 

    savings and investments to a greater extent. 

            Economic  development  in  Third  World  countries  means  growth  and  the 

      participation of  the  poor  in  such  growth.  This  requires  large  investments  and  thus 

    capital. This is not something that has been discovered recently but something that was 

    already  recognized  at  the  start  of  development  co-operation  about  40  years ago. 

    However,  nowadays  many  development  aid  organizations  are  bemoaning cash 

    shortages. Moreover, capital aid within the scope of development cooperation has

    often led to the recipient country becoming over borrowed. Is it possible to promote 

    capital  formation  in  less  developed  countries  through  the  use of  its  fiscal  and 

    monetary policies? When economists address this subject, they like to point out that 

    a national economy can only invest to the same extent as it also saves - and saving 

    mean  forgoing  consumption.  Statistics  show  there  are major  differences  from 

    country  to  country  when  it  comes  to  their  ability  to  forego consumption.  For 

    example, between 1980 and 2000 the national savings rates were between 23% and  58% in  Singapore,  between  34%  and  42%  in  The  People's  Republic  of  China, 

    between -5% and 24% in Ghana and between -4% and 14% in Senegal. 

          The rationale behind this study emanated from the desire to examine how 

    government  policies  particularly  fiscal  and  monetary  policies  has  affected 

      mobilization of savings in the economy and to clarify issues that can manifest in the 

    process. Besides many studies have been conducted on fiscal and monetary 

    policies in the past but little have been done to relate these studies to savings 

      mobilization in Nigeria. Because of the importance of capital formation on 

    economic growth and development it is very essential to study the effect of these 

    macroeconomic policies on saving mobilization. 

            Thus, to design policy instruments through which savings mobilization can 

    be enhanced and sustained through fiscal and monetary policies and to be able to 

    channel it to appropriate capital investment, remains the important rationale 

    behind this study. 




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