Relationship between foreign capital flows, domestic investment and savings in the SADC region

Kapingura, Forget Mingiri

doi:10.1080/0376835x.2018.1487279

Cited by 19 publications

(14 citation statements)

References 17 publications

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“…The empirical results reveal that in the South African Development Community remittances helped in overcoming the limits on the domestic capital formation through permitting a rate of investment generated by domestic savings (Kapingura, 2018). A strong positive relationship between domestic investment and domestic savings and remittances has been observed there.…”

Section: Literature Reviewmentioning

confidence: 85%

Remittances and households’ savings behaviour in Bangladesh

Salahuddin

Masud

Teng

2021

SBR

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Purpose The purpose of this study is to examine the impact of remittance inflow on households’ savings behaviour in Bangladesh. Remittances are considered as the countercyclical flow of income for its recipient economies. It surges the liquidity of the households receiving remittances, allows them to endure local economic shocks and facilitates them to practice productive activities. Remittances often form a big pool of resources for investment which complement the national savings and support the country’s growth through higher rates of capital accumulation. Therefore, if a significant portion of the remittance is used for savings it can lead to prominent economic growth in the long term. Design/methodology/approach Existing literature indicates remittance-receiving households have a greater propensity to use remittance income to meet basic consumption. However, based on the survey conducted by the Bangladesh Bureau of Statistics on remittances and household savings (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s saving (SIR, 2016) and using the ordinary least square regression analysis method, to identify the connection between remittances and household’s savings behaviour in Bangladesh. Findings The findings of this study represent remittances encourage households to pursue different kinds of savings in Bangladesh. Savings are made in the form of opening savings accounts, deposit pension scheme/fixed deposits/Bonds, insurance policies, also savings through non-governmental organizations, cooperative societies and savings at home. Other than remittances the demographic characteristics of the household head also influence the savings choices. Originality/value To enable the implementation of appropriate policies to boost savings, analysis from both perspectives; the household and the national level, requires strong vigilance and surveillance.

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Section: Literature Reviewmentioning

confidence: 85%

Remittances and households’ savings behaviour in Bangladesh

Salahuddin

Masud

Teng

2021

SBR

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“…Even though there has been a rise in capital inflows to African countries, Ndikumana and Verick (2007) find that their effect on investment, economic growth, and alleviation of poverty is still an issue of great concern. Forget (Kapingura, 2018) employs the panel cointegration test and the dynamic ordinary least square method (DOLS) for Southern Africa Development Region (SADC) region. The result reveals that there is a significant positive relationship between domestic saving, investment, FDI, and remittances.…”

Section: Literature Surveymentioning

confidence: 99%

Untitled

2021

IJEFR

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In this study, we investigate the impact of remittances and foreign aid (official foreign assistance) on investment and saving in South Asian countries. We also analyze the comparative influence of remittances and foreign aid in stimulating saving and investment. We use a sample of five South Asian countries over the period 1985-2018 and employ OLS and 2SLS method to estimate the effect of remittance and foreign aid on saving and investment. The result reveals that remittance has a positive impact on saving but has no significant effect on investment and shows that foreign aid has no significant impact on saving but negatively influences investment. In line with our results, a rise in 10 percent of remittances in South Asia raises savings by 1.6 percent in the OLS estimates and by 1.7 percent when we use 2SLS. At the same time for a 10% increase in foreign aid decreases saving by 4.3% and 3.3%, respectively, in two methods. For the second regression, an increase in 10% remittances hamper investment by 1.3% and 1% for OLS and 2SLS, respectively. And for the analogous 10% increase in foreign aid decrease investment by 5.4% and 5.2%, respectively. However, if foreign aid is efficiently used, it can be an important complement to remittances by permitting households to overcome the minimum threshold level and they can use a bigger portion of their remittances for savings and investment motive.

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“…Recent research focusing on the impact of foreign aid on domestic savings in aid recipient countries is largely mixed. Some studies find a positive and significant relationship between foreign aid and domestic savings (Kapingura, 2018;Abu & Karim, 2016); others find a negative and significant relationship between foreign aid and domestic savings (Ssemanda & Karamuriro, 2020;Lubbad, 2019;Ozekhome, 2017); while still others find no significant relationship between foreign aid and domestic savings (Ndikumana & Bankson, 2015). Such mixed results may be attributed to the use of aggregate foreign aid predictors in regression models, which do not specify which form of foreign aid impacts domestic savings.…”

Section: Introductionmentioning

confidence: 99%

Impact of Bilateral and Multilateral Aid on Domestic Savings in Low and Middle-Income Sub Sahara African Countries: Mediating Role of Institutional Quality

Wambaka¹

2022

IBR

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The purpose of the study was to examine the impact of bilateral and multilateral aid on domestic savings in SSA countries, and assess whether the impact depends on the quality of institutions. Using a panel data set of 28 selected SSA countries from 1996 – 2015, a model was specified and estimated using the techniques of random effects based on results of the Hausman test. The results show that only bilateral aid has a significant negative impact on domestic savings of SSA countries, implying a crowding-out effect. However, the impact of multilateral aid was found insignificant. After interacting bilateral and multilateral aid with institutional quality, it turns out that the negative impact of bilateral aid persists whereas multilateral aid shows a positive impact on domestic savings. It is interesting to note that aid regardless of the composition crowds out domestic savings in middle income SSA countries even after interacting with institutions, while for the case of low income countries, foreign aid particularly multilateral aid complements domestic saving if accompanied with improvement in the quality of institutions.

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Relationship between foreign capital flows, domestic investment and savings in the SADC region

Cited by 19 publications

References 17 publications

Remittances and households’ savings behaviour in Bangladesh

Remittances and households’ savings behaviour in Bangladesh

Untitled

Impact of Bilateral and Multilateral Aid on Domestic Savings in Low and Middle-Income Sub Sahara African Countries: Mediating Role of Institutional Quality

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