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Determinants of Private Saving in South Asia

Rabindra Bhandari, Dharmendra Dhakal, Gyan Pradhan and Kamal Upadhyaya ()
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Rabindra Bhandari: Rabindra Bhandari is with Department of ABEMIS, Westminster College, Fulton, MO 6551, MO, US. Email:
Dharmendra Dhakal: Dharmendra Dhakal is with Department of Economics & Finance, Tennessee State University Nashville, TN 37203-3401, USA. Email:
Gyan Pradhan: Gyan Pradhan is with Department of ABEMIS, Westminster College, Fulton, MO 65251, USA. Email:

South Asia Economic Journal, 2007, vol. 8, issue 2, 205-217

Abstract: This article examines the determinants of private saving rates in five South Asian nations using annual time series data. An econometric model is developed in which private saving is a function of government expenditures, the money supply, the real interest rate, macroeconomic instability, per capita income growth and two demographic variables. Prior to carrying out the estimations, we test for the stationarity of the data series by carrying out unit root tests. The overall results indicate that government expenditures and past savings have a negative impact on private saving, while the level of financial development and per capita income growth have a positive effect. The degree of urbanization, the real interest rate and the dependency ratio have no noticeable impact on private saving.

Keywords: JEL: O; JEL: E; Saving; South Asia; Unit Root Test; Cointegration; Granger Causality Test (search for similar items in EconPapers)
Date: 2007
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Handle: RePEc:sae:soueco:v:8:y:2007:i:2:p:205-217