NEXUS BETWEEN INTEREST RATE ON SAVINGS AND INVESTMENT GENERATION IN SUB-SAHARAN AFRICA

Abstract

The study looked at how interest rates affected the creation of investments and savings in Sub-Saharan Africa between 2000 and 2023. The study's goals were to ascertain how interest rates affected savings in Sub-Saharan Africa and to investigate how interest rates affected investment in Sub-Saharan Africa. World Bank development indicators were used as secondary sources of information. To determine the long-term association between the selected variables, the study used the sophisticated econometric techniques of quantile regression. Investment, savings, real interest rates, lending rates, and private sector credit were among the factors that were covered. The findings indicate that while interest rates have no discernible influence on investment in the lower and middle quantiles, they do have a considerable effect on savings from the medium quantile to the upper quantile. Based on these results, the study suggests, among other things, that the monetary authorities in Sub-Saharan African nations should make sure that the interest rates on deposits and loans are changed to encourage investment and thereby promote economic growth, since the processes of saving and investing are crucial to the circular flow of income and to determining the level of income.