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Saving Behaviour under Imperfect Financial Markets and the Current Account Consequences

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  • Liu, Liang-Yn
  • Woo, Wing Thye

Abstract

The authors seek to establish the general empirical importance of investment-motivated saving. Their hypothesis is that inadequate financial intermediation will induce agents to save more in order to undertake lumpy physical investment in the future. The result is a positive relationship between the degree of capital market imperfection and the size of the private saving rate. A simulation exercise calibrated on Taiwan found a close match between the simulated and actual data. Regression analysis established that the private saving rate was negatively related to the level of financial market sophistication. Copyright 1994 by Royal Economic Society.

Suggested Citation

  • Liu, Liang-Yn & Woo, Wing Thye, 1994. "Saving Behaviour under Imperfect Financial Markets and the Current Account Consequences," Economic Journal, Royal Economic Society, vol. 104(424), pages 512-527, May.
  • Handle: RePEc:ecj:econjl:v:104:y:1994:i:424:p:512-27
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    Cited by:

    1. Wing Thye Woo, 2007. "The Challenges of Governance Structure, Trade Disputes and Natural Environment to China's Growth," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 49(4), pages 572-602, December.
    2. Robert C. Feenstra & Wen Hai & Wing T. Woo & Shunli Yao, "undated". "The U.S.-China Bilateral Trade Balance: It'S Size And Determinants," Department of Economics 98-09, California Davis - Department of Economics.
    3. Robert A. Blecker, 1998. "International Capital Mobility, Macroeconomic Imbalances, and the Risk of Global Contraction," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 1998-10, Schwartz Center for Economic Policy Analysis (SCEPA), The New School, revised Nov 2000.
    4. Mihail Petkovski & Kjosevski Jordan, 2014. "An Analysis Of Non-Life Insurance Determinants For Selected Countries In Central And South Eastern Europe: A Co-Integration Approach," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 160-178, October.
    5. Michael Gavin & Ricardo Hausmann & Ernesto Talvi, 1997. "Saving Behavior in Latin America: Overview and Policy Issues," IDB Publications (Working Papers) 6204, Inter-American Development Bank.
    6. Andrus Oks, 2001. "Efficiency Of The Financial Intermediaries And Economic Growth In Ceec," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 8, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    7. Mumtaz Hussain & Oscar Brookins, 2001. "On the determinants of national saving: An extreme-bounds analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 137(1), pages 150-174, March.
    8. Javed AHMED & Malik Fahim BASHIR, 2016. "An empirical investigation of banking sector development and economic growth in a panel of selected SAARC countries," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(607), S), pages 65-72, Summer.
    9. Woo, Wing Thye, 2002. "Some unorthodox thoughts on China's unorthodox financial sector," China Economic Review, Elsevier, vol. 13(4), pages 388-393, December.
    10. Been-Lon Chen & Yeong-Yuh Chiang & Ping Wang, 2000. "Credit Market Imperfections, Financial Activity and Economic Growth," Vanderbilt University Department of Economics Working Papers 0020, Vanderbilt University Department of Economics.
    11. Maxwell Fry, 1998. "Savings, Investment, Growth and Financial Distortions in Pacific Asia and Other Developing Areas," International Economic Journal, Taylor & Francis Journals, vol. 12(1), pages 1-24.
    12. Markus Brueckner, 2016. "Consumption in Asia," CAMA Working Papers 2016-65, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    13. Wing Thye Woo, 2004. "Les obstacles structurels au contrôle macroéconomique en Chine," Revue d'Économie Financière, Programme National Persée, vol. 77(4), pages 225-255.
    14. repec:eee:wdevel:v:104:y:2018:i:c:p:238-256 is not listed on IDEAS
    15. Jakob B. MADSEN & James B. ANG, 2014. "Finance-Led Growth in the OECD since the 19th century: How Does Financial Development Transmit To Growth?," Economic Growth Centre Working Paper Series 1408, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    16. Wing Thye Woo, 2006. "The Structural Nature of Internal and External Imbalances in China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 4(1), pages 1-19.

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