Determinants of Private Saving in The Kingdom of Saudi Arabia

(Fred Bashir Tahir)

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Abstract

Current account deficit is considered to be one of the important economic problems that deserve close attention in Saudi Arabia. The objective of this study is to examine the determinants of private saving as one of the major factors that may provide a solution to the current account deficit problem. Empirical results of the study show that government investment spending has a positive impact on private saving, while the budget surplus, the availability of consumer credits, and non-Saudi remittance transfers have negative effect on private saving. Therefore, it is recommended that private saving should be encouraged via maintaining a balanced budget, more government investment in infrastructures, limiting consumer credit, and by encouraging domestic investment of foreign savings.
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