European Journal of Business Science and Technology 2019, 5(1):30-40 | DOI: 10.11118/ejobsat.v5i1.155

Impact of Savings on Capitalization: Case of Southeast Asian Economies

Gábor Kutasi1, Andrea Lőrincz2, Eszter Szabó2
1 National University of Public Service, Budapest, Hungary
2 Corvinus University of Budapest, Hungary

The study analyses the economics intuition that the domestic savings may determine the investments in a country. The assumption is tested on domestic savings between 1982 and 2016 in Southeast Asia economies in a panel regression framework. The hypothesis is that domestic savings stimulate economic growth through investment financing and, thus, the high savings rate observed in Southeast Asian countries can contribute to the outstanding GDP growth in the region. The tests sort out the significant determinants of investments. The analysis successfully indicates the significance of domestic savings beside other variables, and confirms the hypothesis, namely, the domestic savings affect investments and indirectly the economic growth, while FDI does not prove to be significant.

Keywords: savings, investment, Southeast Asia, FDI, economic growth, Feldstein-Horioka puzzle
JEL classification: C32, D14, E21, E22, F43

Published: August 31, 2019  Show citation

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Kutasi, G., Lőrincz, A., & Szabó, E. (2019). Impact of Savings on Capitalization: Case of Southeast Asian Economies. European Journal of Business Science and Technology, 5(1), 30-40. doi: 10.11118/ejobsat.v5i1.155
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