Determinants of Private Saving In Ethiopia: Evidence from Time Series Data from 1996– 2019

The study private saving was the major source for investment which helps the economy to develop. Despite its importance the rate of private saving can be affected by different social, cultural and political issues. Like other sub-Saharan African countries Ethiopia experienced infant stage of private saving growth rate. This study was intended to identify the main determinates of private saving in Ethiopia. to examine this the study used a time series data from 1996 to 2019 which is estimated by ARDL model. The study undertook pre and post estimation tests of the model. The study also undertook ARDL bound test to check the presence of co-integration between the variables. While identifying the determinants of private saving in Ethiopia the study analyzed independent variables like: gross domestic product per capital, interest rate, consumer price index, urban population ratio, bank branch, money multiplier, age dependency ratio, remittance and investment. The result of the study shows that variables like gross domestic product per capital, interest rate and bank branch has positive and significant impact on private saving in Ethiopia. But inflation has a significant and negative impact on private saving. The remaining variables like: urban population ratio, money multiplier, age dependency ratio, remittance and investment are insignificantly related with private saving. The study recommends that government has to formulate growth inducing policies since the increase in GDPPC has a positive implication on private saving. National bank of Ethiopia has to formulate attractive interest rate to induce the private saving has to control the inflation rate in the country. The other most important factor is the expansion of bank branch in the country to increase the population’s accessibility to bank.