Determinants of household savings and the effect of household savings on the stock market in South Africa and China: a comparative survey

• Main Author: Mutyaba, Franklin
• Format: Others
• Language: en
• Published: 2014
• Subjects: South Africa; China; Savings; Economy; Household savings; Stock market
• Online Access: http://hdl.handle.net10539/13488

Thesis (M.M. (Finance & Investment))--University of the Witwatersrand, Faculty of Commerce, Law and Management, Graduate School of Business Administration, 2013. === Savings are vital in the functioning of any economy as the level of savings in an economy determines the resources available for investment. If firms plan to invest more than households save in an open economy, resources will have to be borrowed from overseas. Savings flow into the financial system and help provide funds for investment spending by firms. This study draws a comparison between the determinants of household discretionary savings in South Africa and China. This study as well investigates the effect of household savings on the stock market in South Africa and China. Empirical analysis was performed inorder to determine the relationship between household savings and various variables, and the effect of household savings on the stock market. Money and quasi money (M2) is the only significant variable and having a negative relationship with household savings in South Africa yet in China, inertia is present the lagged household saving rate is significant. In-order to figure out the impact of household savings on the stock market, we regressed household savings against stock market capitalization. The regression results revealed significance of the explanatory variable household saving in South Africa and insignificance in China. Household savings have an effect on the level of stock market capitalization in South Africa but not in China.