Abstract:
Using the VECM approach, the study analysed the link between savings
rates in Zimbabwe and deposit rates and other macroeconomic variables
for the period 1983 to 2006. The study established a long run relationship
exists between the savings and deposit rates. The speed of adjustments
toward long run equilibrium was found to be 83% per annum which is a
swift adjustment. It was also established that shocks to savings rates in
Zimbabwe explained much of the variances even up to ten years. This
implies that savings rates are less exogenous, though inflation rates and
deposit rates are the independent variables which explain variability in
savings rates. It is against these findings that the Zimbabwean monetary
authorities vary the savings rates directly to influence the volume of
capital saved as all other independent variables influence savings rates
after more than 5 years.
