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- The level of disposable income. Savings depend on the income of consumers after income taxes have been paid. Savings will be high when disposable income is high and will fall when disposing income is falling. It should be noted that the proportion of income that is saved increases as income rises.
- Government taxation policy. Saving is made out of disposable income which depends on the rate of direct taxation. An increase in the rate of direct taxation will reduce disposing income leading to a fall in the level of saving. When direct taxes are reduced disposable income will increase and saving will also increase.
- The availability of financial institutions. The existence of commercial banks, saving banks, insurance companies and other micro financial institutions like credit unions, Njangi houses facilitate saving in an economy. It also depends on how these financial institutions are widely known, accessible and have confidence in the people.
- The rate of interest. Interest rate is considered as the price paid on savings or a reward to those who save. This means that na increase in the level of interest will encourage people to save more.
- Political stability. The political situation also determines the level of saving in a country. People will be afraid to put their money in financial institutions if there is political instability in the country.
- The general proce level (The rate of inflation). When prices are rising, real income falls thus increasing the part of incorporated spent on consumption. An incredible in the portion of income spent on consumption will reduce the part spent on saving if income remains at the same level.
- Social altitude. The social altimeter of people towards thrift influences the level of saving. The level of Saving will be higher where thrift is considered as a virtue but will be lower where people attach a lot of importance to leisure and consumption.
- Habit and customs. People may develop a habit of saving in the society or saving may become a custom of the people. For instance Saving is the habit and custom of some particular ethnic groups in different parts of the world.
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