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Saving Behaviour | Research Study

‘Saving’ this word was clarified by Keynes (1936) as the excess of income over what is spent on consumption. In details, saving also can be defining as a portion of disposal income which excess after consumption of consumer goods. (Keynes.J.M.(1936)).

Saving = income- consumption

According to the Maps world of finance, saving behavior is defined as an understand on how people save in a country in order to realize the economic condition of that country. It is normal facts that if people are saving more, the levels of their personal disposable income are increasing as well. This also implies that the living standard of people will increase as well. (Maps world of finance).

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The world’s average saving rate has been declining since the first oil shock and through the early 1990s. (Loayza.N., Lopez.H., Schmidt-Hebel.K., and Serven.L. (1998)). However this trend conceals a large and increasing dispersion of saving rates, particularly among developing countries. The large heterogeneity in saving behavior is associated to country and time differences in levels of development, growth performance, and fiscal and financial policies. (Loayza.N., Lopez.H., Schmidt-Hebel.K., and Serven.L., 1998)).

People can save their money in a few common types like Savings Account, Money Markets, Certificates of Deposit, Savings Bonds and etc. (Vohwinkle.J.). According to Sun2Surf, Gold investment account is the fast gaining popularity which contributed 5% of the bank’s new customers. The reasons for buying vary, but the common fundamental theme is the uncertainty in the global economic environment, and the consequent pressure come under the US dollar. The continued low interest rate regime globally has also built prospect of eventual inflation pressures, and gold has always been viewed as the hedge against inflation. (Kang.S.L. and Eva.Y. (2011).).

Saving is influenced by current real income, demographic effect and the real rate of return. (Hufner.F. and Koske.I., 2010). According to Bartzsch (2006), his result shown that households with higher income uncertainty tend to save more. According to the (Dynan, Skinner, Zeldas (1995); Lillard and Karoly (1997)), he stated that household with higher levels of lifetime income have a higher lifetime saving rate. Under the life-cycle hypothesis household saving varies with age. With the further assumption of overlapping generations, demographic changes such as the aging of a baby boom can have important implications for saving rates. (Braun, R.A.(2008).

According to McKinnon and Shaw (1973) results showed that financial liberalization led to higher interest rates which equated the demand and supply of savings. The higher interest rates lead to increased savings and financial intermediation in improving the efficiency of savings and investment. The higher real interest rates increase the extent of financial intermediation which in turn raises the rate of economic growth in developing countries (Balassa, 1989).

In Malaysia, majority of Malaysian consumers (32%) plan to save between 1-10% of their income in the next six months. The three main categories for their savings are retirement (59%), investments (38%) and buying or upgrading property (29%). ( Slinger. W. (2010)).

A rise in household saving could be related to higher opportunity costs of consumption today given the subsidization of this form of retirement saving. Logeay et al. (2009) find that a time trend starting in 2001 has a significant impact on the savings rate and interpret this as evidence for an impact of the subsidized private pension. By contrast, Corneo et al. (2009) find that this scheme has not raised the saving ratio for low-income recipients, suggesting that households rather substitute their previous saving by the subsidized one.

According to the graph above it shown that the saving in Malaysia from year 2006-2010. The graph shown that the savings in Malaysia was in increasing trends from 2006 which RM210 million increasing to RM 240 million in years 2007 till RM 275 million in years 2008. Whereas, it decrease to RM 200 million then it was expected to increase till RM 255 million in year 2010. Malaysia saving do not decrease when inflation rate (%) or saving rate (%) decrease because saving is influence by many factor not only these. Saving is influenced by current real income, demographic effect and the real rate of return. (Hufner.F. and Koske.I., 2010).

Problem Statement

Earlier studies of inflation and household saving generally research in U.S. (Campbell.C.R. and Lovati.J.M.). Therefore, I attempt to plan to do this research in Malaysia.

The measure of saving analyzed in the research is a simple indicator for the whether or not household spending was less than household income. This measure captures whether or not household perceived they were able to save. (Rha.J.Y., Montalto.C.P., and Hanna.S.D.(n.d.))

Research Question

What are the factors that influence individual saving behavior?

Will socio-demographic factors such as age, gender, and race affect individual saving behavior?

What are individual saving pattern?

Research Objective

To determine the factors that influence individual saving behavior.

To examine whether the socio-demographic factors such as age, gender, and race affect individual saving behavior.

To determine the individual saving pattern.

Significance of study

This research enhances the further understanding on the Malaysia Citizen saving behavior. It will identify the important factors influence the saving behavior. The significance of this research is intended to help Malaysia Citizen to improve their living standard. Furthermore, this research can let financial institution know more about the saving behavior of Malaysia Citizen which can help them improve their operation. Financial Institution can offer different types of saving to different kind of people. For example, Bank can offer a types of saving or invetsment which provide lower interest with low risk to poor people for them to save or earn some interest. Bank also specialize to provide a types of saving or investment with high interest and high risk to richer people if they are risk-taker. This ways can increase bank’s fund and bank can used the money to invest to other business in order to expand bank’s business and it also benefis savers with provide high return and more safer than put their money in other saving types or other investment. Besides that, student and teachers also can benefits from my research which they can take my research to understand saving behavior Malaysia Citizen and also can do further research on saving behavior in their study. My research also important government which they can know well Malaysia Citizen saving behavior which they can develop an idea to increase the saving rate of Malaysia Citizen increases the GDP of Malaysia.

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Scope of study

Saving behavior is the dependent variable in my research. Whereas, the income, wealth, rate of return and inflation is the independent variable of my research. In my research they are a few moderating variables like age and gender that will influence saving behavior- the dependent variable in my research. Both the independent variable and moderating varaible in my research will affect the saving behavior of people.

The area of the study is the impact of income, wealth, rate of return, and inflation on the saving behavior of Malaysia Citizen. The target respondent age, gender, and races also directly influence the saving behavior Malaysia Citizen. The target respondent of my study is Malaysia Citizen who age above 20 years old which i will assign my questionnaire in Melaka. My questionnaire will equally distribute to 3 races which are Malays, Chineses, and Indian who stay in Melaka. I planned to distribute 200 set of questionnaire in order to complete my research.

Organization of Research

Chapter 1: Chapter 1 is the introduction part of our research. We will define the means of saving and saving behavior. It is a short description saving behavior and factors that influence individual saving behavior of Malaysia Citizen. It also will include the significance of our study at Malaysia.

Chapter 2: In this chapter, I will more details in defined what is saving behavior and factors that influence individual saving behavior. It will include detail definition of independence variable that are income, wealth, rate of return inflation.

Chapter 3: Chapter 3 is the chapter which concern with research method. In this chapter we will have a more details in saving behavior and the factors influence saving behavior. I will develop a hypothesis that related to the 4 independent variables. We will do a research, data approach, data sources, questionnaire, sampling method, data collection, analysis, pilot study and other method of measurement to complete our research.

Chapter 4: In this chapter, I going to do a research finding and discussion. It will include the descriptive analysis, reliability analysis, hypothesis testing and discussion of the research finding.

Chapter 5: Chapter 5 is the conclusion part also means is the last part of my research. It will include the research finding of my title. I also will knowledge implication and managerial implication. Discussion of research objective will be written in my research and recommendation for future study in my research report. Last but not least, I will have a conclusion part in the chapter 5 or last chapter.

Chapter Summary

In the early part of this chapter 1, I am done with some introduction and definition of saving behavior. Follow by that, I am doing problem statement that identifying our research gap. I also will make some argument about our research neglected area and re-iterate the value of our research. Then, I will do some research question and objective to more understand influence of saving behavior. I will further explain the value of our research, a discussion of area cover and not cover which also provide a reason for our decision.


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