Repository :: Browsing by Author "Mduma, John Kedi"

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The impact of interest rate policies on financial savings in Tanzania: a dynamic specification model.
(University of Dar es Salaam, 1999) Mduma, John Kedi
The main objective of this study was to ascertain the impact of interest rate policies on financial savings in Tanzania. Annual time series data for the 1967-97 period were used in the analysis. A modified Azam (1995) model was employed and cointegration technique was used in the estimation of the parameters. The major findings show that real rate of interest has positive impact on financial savings in Tanzania. However, implicit rate of returns has insignificant positive impact on financial savings. The study shows that financial sector reforms and the growth in per capita income has positive effects on financial savings, though the immediate effects of per capita income was negative. This phenomenon has been explained by the fact that majority of the Tanzanians lives barely at subsistence level, hence any increase in income is immediately consumed. Poor fiscal policy has been shown to have negative impact on financial savings in Tanzania. Policies that enforce lucrative interest rates to holders of financial savings are recommended. Among others, a more competitive financial environment has to be created in order to attain efficiency. Furthermore, to increase the habits of financial savings, the government has to educate people on the importance of financial savings as opposed to saving in physical assets.