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The effects of interest rates on savings in developing countries

Author

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  • Balassa, Bela

Abstract

This paper provides evidence on the effects of interest rates on savings in developing countries. While the evidence is not conclusive, time-series estimates for individual countries as well as cross-section and time-series estimates for a number of countries point to the positive effects of interest rates on savings. At the same time, a variety of factors may have reduced the statistical significance of the estimates. The author points out that estimates of savings in developing countries are subject to considerable error. Also there are other errors associated with the measurement of interest rates and inflation rates, which are necessary to derive real interest rates. Finally, there is evidence that negative real interest rates bring a shift to gold, real estate, and consumer durables, which latter are included in savings as measured in national income statistics.

Suggested Citation

  • Balassa, Bela, 1989. "The effects of interest rates on savings in developing countries," Policy Research Working Paper Series 56, The World Bank.
  • Handle: RePEc:wbk:wbrwps:56
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    References listed on IDEAS

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    Cited by:

    1. repec:voj:journl:v:63:y:2016:i:1:p:87-112 is not listed on IDEAS
    2. Iqbal, Zafar & James, Jeffrey & Pyatt, Graham, 2000. "Three-Gap Analysis of Structural Adjustment in Pakistan," Journal of Policy Modeling, Elsevier, vol. 22(1), pages 117-138, January.
    3. Juthathip Jongwanich, 2010. "The determinants of household and private savings in Thailand," Applied Economics, Taylor & Francis Journals, vol. 42(8), pages 965-976.
    4. Zafar Iqbal, 1993. "Institutional Variations in Saving Behaviour in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 32(4), pages 1293-1311.

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