SAVINGS, INVESTMENT AND ECONOMIC GROWTH NEXUS.
Savings and investment plays a key role in promoting economic growth of any nation. Theories of savings and investment suggests that savings causes investment and thereby increases economic growth. However, the issue of long run relationship between savings, investment and economic growth is debatable both theoretically and empirically. Empirical literatures reviewed are mixed and do not provide conclusive empirical evidences. Most of the existing empirical literature studies the relationship between savings and growth and investment and economic growth within a bivariate framework in Nigeria. Based on the
findings of recent studies, researchers come to the conclusion that change in gross domestic savings movements has negative and significant effect on the change in economic growth in Nigeria; that the change in gross domestic investment has positive and significant effect on the change in the Nigerian economic growth. The result also revealed that there is long run relationship between savings, investment and economic growth in Nigeria. The major economic implication of this evidence for investors of the NSE is that the returns from stock investments protect their wealth against inflation only in the long-run.
RECOMMENDATIONS.
Following the outcomes of many research works, we recommend as follows:
1. The government should set a sound and fertile environment in order to foster domestic
saving that will help to increase the level of economic growth in Nigeria.
2. The government should increase the deposit rate of the deposit money banks in Nigeria
through monetary policy.
3. The government should transform the financial sector of the country.
4. Government should create favorable condition in order to mobilize domestic savings from
the small depositors.
