Investment, Savings, Interest Rate and Bank Credit to the Private Sector Nexus in Pakistan

Rahila Munir, Rehmat Ullah Awan, Rehmat Ullah Awan, Zakir Hussain, Zakir Hussain

Abstract


The present study examines long run and short run association among Investment, Savings, Real Interest rate on
Bank deposits and Bank Credit to the private sector, accompanied with the impact of financial liberalization on
key macro economic variables in Pakistan for the period 1973 to 2007. ARDL Bounds Testing Approach has
been applied for co-integration of annual time series data. To test the order of integration of the variables,
DF-GLS and Ng-Perron Tests have been employed. The results show that Private Investment is positively
affected by Savings, Real interest rate on bank deposits, Bank credit to private sector and Public investment in
the long run in a developing country like Pakistan, supporting Complementarity Hypothesis of Mckinnon-Shaw
(1973).

Full Text: PDF DOI: 10.5539/ijms.v2n1p140

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International Journal of Marketing Studies  ISSN 1918-719X(Print) ISSN 1918-7203(Online)

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