Household savings, financing and economic growth in South Africa

• Authors: Mongale Itumeleng Pleasure , Mashamaite Tumelo , Khoza Nyiko
• Languages of publication: EN

Abstracts

EN

The South African economy is characterised by low levels of household savings which play a very crucial role in stimulating sustained economic growth. At the same time consumers borrow in order to consume. The paper intends to investigate the impact of household savings and financing on economic growth in South Africa. The study is envisaged to assist monetary authorities and policy makers to mitigate this problem. An annual time series data covering the period from 1980 to 2014 is analysed by means of the Vector Error Correction Model approach. The Johansen Cointegration test results confirmed the existence of a long run relationship amongst variables under investigations. Moreover, the results suggest that financing, namely; credit extensions and leasing finance have positive relationships with the country’s economic growth while household savings indicate a negative relationship with growth. That being the case, the recommendation is that since it has been established by other studies that a rapid increase in credit is not commonly perceived to be one of the leading indicators of financial instability, policymakers are advised to consider imposing stringent credit control measures so that the demand for financing can be kept under control.

Keywords

EN

Household savings; credit extensions; leasing finance; VECM; South Africa.

Discipline

• ECONOMICS: ECONOMICS

• Publisher: Prague Development Center, Czech Republic
• Journal: Business and Economic Horizons
• Year: 2018
• Volume: Volume 14
• Issue: Issue 1
• Pages: 105-116

Dates

published

2018-01-24

Contributors

author

Mongale Itumeleng Pleasure

• Faculty of Management and Law, University of Limpopo, South Africa

author

Mashamaite Tumelo

• Faculty of Management and Law, University of Limpopo, South Africa

author

Khoza Nyiko

• Faculty of Management and Law, University of Limpopo, South Africa

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