Factors Influencing Saving Behaviour of Nigerians

Abstract

Purpose: This paper is motivated by the dearth of domestic savings required for inclusive economic growth in Nigeria. The paper examines the impact of financial literacy and socio-economic factors on Nigerians saving behaviour.

Methodology: The models are estimated with linear probability and probit estimators. There are three categories of variables in the models; the independent variables, which are the computed scores of financial literacies; control variables, which are the measures of demographic and socioeconomic factors and; the dependent variables, which are the measures of frequencies of saving in three financial institutions in Nigeria.

Findings: Our finding resonates with policy debates suggesting that improving Nigerians knowledge about finance and financial services would foster Nigerians saving behaviour. We observed also that households with 1 - 4 persons have tendency to put away more money as savings. The paper documented that the optimum household size for accelerating saving is 5-6 persons beyond which enforces financial exclusion or dissaving, among others.

Unique contributions to theory, practice and Policy: This paper provide fresh evidence on the influence of the newly financial literacy scores variables designed by the National Bureau of Statistics (NBS) on Nigerians saving behaviour. It equally, expanded the saving literature by considering differently level of household sizes to explained Nigerians saving behaviours. Consequent on the findings the paper suggested that the Federal Government of Nigeria in collaboration with the States governmant reenforce the National Financial Inclusion Strategy framework and include a finance course to be made mandatory and taught at all levels of education in Nigeria. The paper also suggested a rethink on the Nigerian population policy to an aggressive campaign on family planning aimed at reducing fertility level to about 2 - 3 children per family.