11 research outputs found
Empirical investigation on determinants of national saving in Ethiopia
No full textThesis(Master) -- KDI School: Master of Public Policy, 2021National saving is one of the driver sources for sustaining economic growth. However, low savings are cited as a constraint to sustained economic development in Ethiopia. The key aim of the study is to identify the determinant of national saving. The research carried out an Augmented Ducky-Fuller test to examine the stationary variables. The co-integration bound test scheme was applied to see the long-run association between variables. The result has shown that budget deficit, inflation rate, working-age dependency ratio, and trade openness, and deposit interest rate negatively determined national saving. Whereas; the GDP growth rate and broad money supply were positively affected in the long run. Based on these findings, the following policy implications suggest that prudent fiscal policy should be designed with a well-managed expenditure policy to reduce government budget deficits. The central bank needs hard work to enhance financial deepening and liberate deposit interest rates to ensure sustained savings. Give priority to establish a stable macroeconomic situation that will help to handle highly fluctuating prices. The age dependency ratio negatively affects the saving in the long run; therefore, the government should have worked to become out of the baby boom generations will positively contribute to the savings.masterpublishedDegefe Anulo OLKAM
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: Empirical Evidence Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables. The model was estimated using the Autoregressive Distributive Lag (ARDL) model bounds cointegration test framework to investigate the existence of long-run integration among series. The Granger causality test based on the vector error correction model (VECM) was deployed in order to capture the long run equilibrium relationship among variables and to identify supportive hypotheses for the Ethiopian economy. The ADF unit root test was employed to determine whether variables remained stationary. The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting real economic growth. This paper also urges that the monetary authority should promptly encourage the development of a market-based financial system, which will be compatible with the development needs and offer more options for accessing financial markets
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: Empirical Evidence Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables. The model was estimated using the Autoregressive Distributive Lag (ARDL) model bounds cointegration test framework to investigate the existence of long-run integration among series. The Granger causality test based on the vector error correction model (VECM) was deployed in order to capture the long run equilibrium relationship among variables and to identify supportive hypotheses for the Ethiopian economy. The ADF unit root test was employed to determine whether variables remained stationary. The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting real economic growth. This paper also urges that the monetary authority should promptly encourage the development of a market-based financial system, which will be compatible with the development needs and offer more options for accessing financial markets
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: Empirical Evidence Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables. The model was estimated using the Autoregressive Distributive Lag (ARDL) model bounds cointegration test framework to investigate the existence of long-run integration among series. The Granger causality test based on the vector error correction model (VECM) was deployed in order to capture the long run equilibrium relationship among variables and to identify supportive hypotheses for the Ethiopian economy. The ADF unit root test was employed to determine whether variables remained stationary. The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting real economic growth. This paper also urges that the monetary authority should promptly encourage the development of a market-based financial system, which will be compatible with the development needs and offer more options for accessing financial markets
The Financial Development, Savings and Economic Growth Nexus Empirical Evidence from Ethiopia
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables.
The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. This paper used the Granger causality test to determine causal influences in the Ethiopian economy. The vector error correction model was employed for this purpose. The study also aimed to identify hypotheses that support these causal influences.
The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: An Empirical Evidence-Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables.
The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. In this paper, the Granger causality test based on the vector error correction model is deployed to determine the causal influences and to identify supportive hypotheses for the Ethiopian economy.
The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth. The study also recommends that the monetary authority should promptly encourage the development of a market-based financial system that is compatible with the development of bank-based systems
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: Empirical Evidence Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables. The model was estimated using the Autoregressive Distributive Lag (ARDL) model bounds cointegration test framework to investigate the existence of long-run integration among series. The Granger causality test based on the vector error correction model (VECM) was deployed in order to capture the long run equilibrium relationship among variables and to identify supportive hypotheses for the Ethiopian economy. The ADF unit root test was employed to determine whether variables remained stationary. The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting real economic growth. This paper also urges that the monetary authority should promptly encourage the development of a market-based financial system, which will be compatible with the development needs and offer more options for accessing financial markets
Exploring the Linkages between Financial Development, Savings, and Economic Growth in Ethiopia: An Empirical Evidence-Based Analysis
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables.
The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. In this paper, the Granger causality test based on the vector error correction model is deployed to determine the causal influences and to identify supportive hypotheses for the Ethiopian economy.
The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback or bidirectional hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth. The study also recommends that the monetary authority should promptly encourage the development of a market-based financial system that is compatible with the development of bank-based systems
The Financial Development, Savings and Economic Growth Nexus Empirical Evidence from Ethiopia
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables.
The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. This paper used the Granger causality test to determine causal influences in the Ethiopian economy. The vector error correction model was employed for this purpose. The study also aimed to identify hypotheses that support these causal influences.
The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth
The Financial Development, Savings and Economic Growth Nexus Empirical Evidence from Ethiopia
No full textEthiopia has experienced substantial growth in per capita income, domestic savings, and financial sector developments over the past four decades. This paper aims to examine the causal relationship between certain variables in Ethiopia from 1981 to 2023. The variables considered in this paper include per capita income, private sector credit, domestic savings, and the rate of change in the consumer price index. Per capita income and private sector credit are used as proxies to measure real economic growth and financial sector development, while the inflation rate plays a crucial role in controlling these variables.
The study used the bounds cointegration test within the Autoregressive Distributive Lag (ARDL) model framework to investigate the existence of long-run integration among series. The ADF unit root test was employed to determine whether variables remained stationary. This paper used the Granger causality test to determine causal influences in the Ethiopian economy. The vector error correction model was employed for this purpose. The study also aimed to identify hypotheses that support these causal influences.
The findings affirm the existence of bidirectional causal relationships among the variables. Thus, the Ethiopian economy adheres to a feedback hypothesis, which suggests that an expansion of real economic growth will favour efficient financial development and stimulate savings. Similarly, having a well-functional financial sector development and steadfast domestic resources plays a crucial role in promoting economic growth
