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Does the quality of institutions enhance savings? The case of Sub-Saharan Africa

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  • Elliot Boateng
  • Frank W. Agbola
  • Amir Mahmood

Abstract

Over the last three decades, there has been increasing disparity in savings across regions and income groupings globally. In this paper, we investigate whether the quality of institutions explains the saving disparities in Sub-Saharan Africa (SSA). Utilizing comprehensive panel data and spanning the period 1980–2015, we estimate a savings model using the two-step instrumental variable generalized method of moment (2SIV-GMM) estimator. Our results show that the impact of institutions on savings behaviour differs across regions and income groupings, and in SSA, in aggregate. We find that the level and growth of per capita income and terms of trade enhance savings whereas government consumption expenditure, financial sector development and the elderly dependency rate are savings impeding. The findings are robust to alternative model specification and highlight the importance of institutions in influencing savings behaviour in SSA.

Suggested Citation

  • Elliot Boateng & Frank W. Agbola & Amir Mahmood, 2019. "Does the quality of institutions enhance savings? The case of Sub-Saharan Africa," Applied Economics, Taylor & Francis Journals, vol. 51(58), pages 6235-6263, December.
    • Handle: RePEc:taf:applec:v:51:y:2019:i:58:p:6235-6263
    DOI: 10.1080/00036846.2019.1616066
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    Cited by:

    1. Amponsah, Mary & Agbola, Frank W. & Mahmood, Amir, 2023. "The relationship between poverty, income inequality and inclusive growth in Sub-Saharan Africa," Economic Modelling, Elsevier, vol. 126(C).
    2. Boateng, Elliot & Agbola, Frank W. & Mahmood, Amir, 2021. "Foreign aid volatility and economic growth in Sub-Saharan Africa: Does institutional quality matter?," Economic Modelling, Elsevier, vol. 96(C), pages 111-127.
    3. Acheampong, Alex O. & Opoku, Eric Evans Osei & Dogah, Kingsley E., 2023. "The political economy of energy transition: The role of globalization and governance in the adoption of clean cooking fuels and technologies," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).

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