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Private Saving in India and Malaysia Compared: The Role of Financial Liberalization and Expected Pension Benefits

  • Ang, James
  • Sen, Kumal

In this paper, we provide a comparative account of the evolution of private saving in India and Malaysia, and analyze how policy changes in the financial sectors and pension systems help explain differences in their saving performance. Using the ARDL bounds estimation procedure, we find a fairly robust long-run relationship between private saving and its determinants in both countries. Consistent with the predictions made in the life cycle model, our results indicate that higher income growth stimulates private saving and an increase in age dependency retards private saving. The results provide some support for the hypothesis that financial liberalization results in lower private saving in both countries. The evidence also indicates that expected pension benefits tend to stimulate private saving in India, but that the reverse is found in Malaysia.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14413.

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Date of creation: 2009
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Handle: RePEc:pra:mprapa:14413
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