THE RELATIONSHIP BETWEEN FINANCIAL SECTOR DEVELOPMENT AND SAVINGS MOBILISATION IN ZIMBABWE

Abstract

This study seeks to investigate the relationship between savings and financial sector development in Zimbabwe using the Autoregressive Distributive Lag (ARDL) approach. The study used annual data from 1990 to 2018. The F-Bounds tests showed that there is a long run relationship between savings and financial sector development in Zimbabwe. The ARDL presented a bidirectional causality relationship between savings and financial sector development in both short and long run periods in Zimbabwe. The study also noted a stable long run relationship between credit to the private sector and domestic savings. Domestic savings indicated a positive impact on credit to the private sector. Current savings has a positive effect on future savings in Zimbabwe and therefore, the level of current savings determines the magnitude of growth of future savings.