IMPACT OF INFLATION RATE ON SAVINGS MOBILIZATION IN NIGERIA (1990-2023)

This study investigates the impact of inflation on savings mobilization in Nigeria from 1990 to 2023, analyzing the interplay between key macroeconomic indicators and the capacity of individuals, households, and financial institutions to accumulate savings. Using annual time-series data sourced from the Central Bank of Nigeria, National Bureau of Statistics, World Bank, and IMF, the research employs the Autoregressive Distributed Lag (ARDL) bounds testing approach to assess both short- and long-run relationships between savings mobilization, inflation rate, interest rate, exchange rate, GDP growth, and financial development. Findings reveal that inflation exerts both negative and positive effects on savings mobilization depending on the time horizon: in the short run, rising inflation generally reduces savings, while in the long run, moderate inflation correlates positively with savings when supported by stable economic policies. Interest rate fluctuations significantly influence savings behavior, with higher rates deterring short-term savings but encouraging long-term mobilization when real returns are positive. Exchange rate volatility, foreign direct investment, and GDP growth also display mixed effects on savings patterns. The error correction term indicates a high adjustment speed toward equilibrium at 92% annually, while diagnostic tests confirm model stability, absence of serial correlation, and homoscedasticity. The study concludes that controlling inflation, maintaining competitive real interest rates, and ensuring macroeconomic stability are essential for enhancing savings mobilization in Nigeria. Policy recommendations include targeted financial literacy programs, innovative savings products, and credible monetary strategies to foster a robust savings culture and support sustainable economic growth.