تلخیص
Savings is one of the driving factors of economic development. Though
Bangladesh economy started its financial system with control over
interest rate, directed credit market, complex rules for money, capital
markets and over-valued exchange rates. Later the financial
liberalization initiative in 1982 and Financial Sector Reform Project
(FSRP) in 1990 have been undertaken. This paper aims to estimate
financial savings function that would exhibit the savings response to
these initiatives. Simultaneous equation model was run to estimate the
financial saving function as there exists simultaneity between financial
savings and economic growth. Data were collected from secondary
sources for the period of the year 1976/1977 to 2005/2006. Empirical
results show that the economic growth and number of branches of
scheduled banks have positive impact on savings rate though it is
statistically insignificant, while the real rate of interest and financial
liberalization exerts a statistically significant positive impact on
financial savings. Growth function with low explanatory power,
however, captures the effect of financial savings rate, foreign direct
investment (FDI) inflow and adult literacy rate. This study finally
suggests increasing the number of scheduled bank branches, extending
the bank services in rural sides, liberalizing interest rates and reducing
government intervention in the financial market to foster financial
savings and economic growth.
Mohammed Syed ul Islam, Evana Nusrat Dooty. (2014) Financial Savings and Economic Growth: An Econometric Analysis in the Context of Bangladesh, Abasyn Journal of Social Sciences, Volume-07, Issue-1.
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