U N IV E R S IT I T E K N O L O G I M A R A C A W A N G A N K E L A N T A N
A STUDY ON THE IMPACT OF ECONOMIC GROWTH\
INTEREST RATE AND INFLATION RATE ON PRIVATE SA VINGS IN MALAYSIA
PREPARED BY:
NORASHIKIN IBRAHIM 2005653559
BACHELORS OF BUSINESS ADMINISTRATION (HONS) FINANCE
FACULTY OF BUSINESS AND MANAGEMENT UNIVERSITI TEKNOLOGI MARA
MACHANG CAMPUS KELANTAN SUBMISSION DATE:
APRIL 2007
U N IV E R S iT I T E K N O L O G I M A R A C A W A N G A N K E L A N T A N
BACHELORS OF BUSINESS ADMINISTRATION (HONS) FINANCE
FACULTY OF BUSINESS AND MANAGEMENT UNIVERSITI TEKNOLOGI MARA
MACHANG CAMPUS KELANTAN
DECLARATION OF ORIGINAL WORK
I, NORASHIKIN BINTI IBRAHIM, (I/C NUMBER: 8403085022)
Hereby, declare that:
• This work has not previously been accepted in substance for any degree, locally or overseas, and it not being concurrently submitted for this degree or in any other degree.
• This project paper is the result of my independent work and investigation, accept where otherwise stated.
• All verbatim extract have been distinguished by quotation marks and sources of my information have been specifically acknowledged.
Signature: Date:
TABLE OF CONTENT PAGE
LETTER OF TRANSMITTAL i
DECLARATION OF WORK ii
ACKNOWLEDGEMENT iii
TABLE OF CONTENTS iv-v
ABSTRACT vi
LIST OF ABBREVIATION vii
LIST OF TABLES viii
1 INTRODUCTION 1
1.1 BACKGROUND OF THE STUDY1
1.1.1 Overview of economic growth 3
1.1.2 Overview on Interest rate 5
1.1.3 Overview on inflation rate 6
1.2 PROBLEM STATEMENT 8
1.3 OBJECTIVE OF STUDY 10
1.4 THEORETICAL FRAMEWORK 11
1.5 STATEMENT OF HYPOTHESIS 12
1.6 SCOPE OF STUDY 14
1.7 SIGNIFICANCE OF THE STUDY 15
1.7.1 To the Researcher 15
1.7.2 To the Businesses 15
1.7.3 To the Government 15
1.7.4 To financial institution 15
1.8 LIMITATION OF STUDY 16
1.8.1 Data Collection 16
1.8.2 Accuracy and Reliability of Information 16 1.8.3 The availability of the literature review 16
1.9 DEFINITION OF TERMS 17
2 LITERATURE REVIEWS 20
2.1 Economic growth 20
2.2 Interest rate 23
2.3 Inflation rate 27
3 RESEARCH METHODOLOGY 30
3.1 Introduction 30
3.2 Data collection 30
3.3 Method for Analyzing Data 32
3.4 Regression analysis
3.4.1 Multiple Linear Regression Analysis 3.5 Estimation and Interpretation Techniques
3.5.1 Coefficient Of Correlation (R) 3.5.2 Coefficient of Determination 3.5.3 Durbin Watson
3.5.4 T - Statistic 3.5.5 F- Statistic 4 FINDING AND ANALYSIS
4.1 Evaluation of Result 4.2 Result and Interpretation
4.2.1 Coefficient of Correlation (R) 4.2.2 Coefficient of determination (R2) 4.2.3 Multiple linear regression analysis 4.2.4 Durbin Watson
4.2.5 T- Statistic 4.2.6 F- Statistic
5 CONCLUSION AND RECOMMENDATIONS 5.1 Conclusion
5.1.1 Economic Growth 5.1.2 Interest Rate 5.1.3 Inflation Rate 5.2 Recommendations BIBLIOGRAPHY
APPENDICES Regression analysis results Graphs
Data
Durbin Watson table F-Statistic table T- Table
32 33 35 35 36 37 39 41 42 42 44 44 45 46 49 50 52 54 54 55 58 61 64
v
ABSTRACT
This study conducted to examine the private savings behavior in Malaysia. This study further examines the relationship between economic growth, interest rate, and inflation rate with the private saving in Malaysia. This study done on this topic as the private savings said to be affected by the three economic variables and less study undertaken regarding this topic in Malaysia. It also become essential issue in Malaysia as private savings is a major source of fund and capital and Malaysia is one of the largest saving countries in world. All data used are in yearly basis range from year 1972 until 2005.
Using the Multiple Linear Regression, this study reveals that none the variables examine is significant to the private savings in Malaysia.
