EconPapers    
Economics at your fingertips  
 

Household savings, financing and economic growth in South Africa

Itumeleng Pleasure Mongale, Tumelo Mashamaite and Nyiko Khoza

Business and Economic Horizons (BEH), 2018, vol. 14, issue 1, 105-116

Abstract: The South African economy is characterised by low levels of household savings which play a very crucial role in stimulating sustained economic growth. At the same time consumers borrow in order to consume. The paper intends to investigate the impact of household savings and financing on economic growth in South Africa. The study is envisaged to assist monetary authorities and policy makers to mitigate this problem. An annual time series data covering the period from 1980 to 2014 is analysed by means of the Vector Error Correction Model approach. The Johansen Cointegration test results confirmed the existence of a long run relationship amongst variables under investigations. Moreover, the results suggest that financing, namely; credit extensions and leasing finance have positive relationships with the country’s economic growth while household savings indicate a negative relationship with growth. That being the case, the recommendation is that since it has been established by other studies that a rapid increase in credit is not commonly perceived to be one of the leading indicators of financial instability, policymakers are advised to consider imposing stringent credit control measures so that the demand for financing can be kept under control.

Keywords: Household savings; credit extensions; leasing finance; VECM; South Africa (search for similar items in EconPapers)
JEL-codes: C01 C22 D14 F43 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
https://academicpublishingplatforms.com/downloads/ ... nsing_pp.105-116.pdf (application/pdf)
https://academicpublishingplatforms.com/volume.php?journal=BEH&id=3&number=30 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pdc:jrnbeh:v:14:y:2018:i:1:p:105-116

Access Statistics for this article

Business and Economic Horizons (BEH) is currently edited by Orifjan Namozov, Ph.D.

More articles in Business and Economic Horizons (BEH) from Prague Development Center Contact information at EDIRC.
Bibliographic data for series maintained by Jaroslav Holecek ().

 
Page updated 2018-06-23
Handle: RePEc:pdc:jrnbeh:v:14:y:2018:i:1:p:105-116