Empirical Evidence on the Causal Relationship between Savings and Economic Growth in Kenya

Luka K. Kiptui

Abstract: This study set out to establish the determinants of savings in Kenya and the causal relationship between savings and economic growth, whether higher growth leads to higher savings in the long run. The results derived from the study indicate that the positive relationship between savings and economic growth can be attributed to a causal relationship whose direction is from growth to savings, rather than from savings to growth. Therefore, growth has significant impact on savings and indeed higher growth will lead to increased savings in the long-run.

Keywords: Causal Relationship, Savings, Economic Growth