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Evaluation of the Effect of Liquidity Growth on Saving Rate in the Developing Countries

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  • Mohammad Reza Monjazeb
  • Marzieh Rashvand Sadeghi
  • Kobra Oladi

Abstract

The role of savings in determining economic growth and investment is among issues that have always been considered in the formulation of policy and economic theories. This fact has been accepted that it is a quite necessary action to put aside a part of production i.e. to create saving to be converted in to production capital for maintaining the level of existing welfare and also achieving a higher level of welfare. The aim of the present study is to evaluate the role of liquidity growth on saving rates in 11 developing countries (Ecuador, Venezuela, Colombia, Armenia, Brazil, Iran, Azerbaijan, Turkey, Tunisia, China and Thailand) within the period 2001-2010. In this paper, the software EVIEWS and panel data analysis were used to evaluate the effect of liquidity growth on savings rates. Present study demonstrates the undeniable role of economic growth on saving, because the estimations results indicate that although both variables of liquidity ratio and economic growth have significant and positive effect on saving, but economic growth is more effective which is fully reasonable.

Suggested Citation

  • Mohammad Reza Monjazeb & Marzieh Rashvand Sadeghi & Kobra Oladi, 2014. "Evaluation of the Effect of Liquidity Growth on Saving Rate in the Developing Countries," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(7), pages 908-914.
    • Handle: RePEc:asi:aeafrj:v:4:y:2014:i:7:p:908-914:id:1223
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