Abstract:
This study set out to ascertain the relationship between domestic savings and
economic growth in the midst of antecedent variables with yearly data during
the period of 1970-2013. Using Johansen cointegration test and vector error
correction model, the study found that, in the long-run, consumer price index,
trade openness, foreign direct investment, and domestic savings have
positive significant impacts on economic growth. With respect to the shortrun
estimates, the lags in domestic savings have negative but insignificant effects
on economic growth. It is, therefore, incumbent on the government to
uphold, guard, and sustain the political stability so jealously since it can create
a conducive financial atmosphere necessary to mobilise savings in order to
improve the growth rate of the Ghanaian economy. It is also recommended
that the central bank pays a particular attention to rural savings mobilisation
through the regulation of mobile banking by allowing the telecommunication
companies to also pay interest to savers on their mobile deposits and establishment
of banking financial institutions at least in each district in Ghana.
