SAVINGS: ANALYSIS OF STUDENTS’ ATTITUDE IN TERTIARY INSTITUTIONS.

INTRODUCTION

The concept of private savings has overtime attracted a whole lot of research interest especially

in the Early 20th century when notable scholars such as Keynes (1936), Duesenberry (1949),

Modigliani (1954), and numerous others have contributed to the body of knowledge. Of all the

conflicting theories on savings, the widely accepted description of the term “savings” simply

refers to the portion of a person’s disposable income left unconsumed i.e. what is left of the

disposable income after the subtraction of consumer spending. Many theories such as the

Absolute Income Hypothesis(AIH), Relative Income Hypothesis(RIH), Permanent Income

Hypothesis(PIH), and others have attempted to explain the rationale for savings.

The reason for savings has overtime been studied with variables such as Health, Emergency,

Living standards, Economic growth and development, and many more. For example, some of

the studies on the nexus between Savings and Economics growth have birthed the popular

knowledge which believes that savings are a major driver for investment which consequentially

leads to Economic growth. Thus, the importance of savings and its study to help influence the

decisions of households, forms, and government as well as providing insights to strategic policy

formulation for institutions and government agencies cannot be overemphasized.

Savings, as explained by some economic growth theories, plays a very important role in the

growth and development of an economy. The model of economic growth designed by Harrod

(1939) and Domar (1946) explains that the rate at which an economy grows is dependent on

the level of savings in the economy. High rates of savings in an economy would translate to
increased capital accumulation (investment) and inevitably economic growth. Apart from

economic growth, different reasons or motives behind which people save, have been identified

by researchers. Keynes (1936) identified eight saving motives. His eight saving motives include:

 Precaution: Setting aside for unexpected circumstances.

 Foresight: Meeting anticipated future needs.

 Calculation: Earning interest.

 Improvement: Increasing the standard of living over time.

 Independence: Needing to feel self-sufficient and in control.

 Enterprise: Investing money into a business.

 Pride: Leaving money to heirs.

 Avarice or miserliness: Being greedy or tightfisted.

However, many of the works on the subject matter of our research (Savings: Behavioral analysis

of students’ attitudes in tertiary institutions) have received little or no attention globally and

more importantly in Africa. In Nigeria, the optimism of many Nigerian students’ post-graduation

from the university is to secure a well-paying job and attain financial stability in the long run.

But with an increasing unemployment rate currently, at 23.10% (National Bureau of Statistics),

the feasibility of employment keeps declining. In light of this unfavorable economic situation,

entrepreneurship development is increasing among students as a feasible and more viable

means of livelihood but the execution of some of the numerous start-up businesses is limited

by lack of capital. However, a key problem is that many do not save or are inconsistent in their

savings (Kanjanapan, 2004 and Canfield, et al; 2000). According to the report of the National

Universities Commission (NUC), the number of students currently in the Tertiary institution
constitutes only about 1% of the estimated population if Nigeria which is roughly 1.9million

naira. While Education is not the focal point if our research work, we will be taking up this

student with the assumption that recipients of tertiary education in Nigeria can generate

income and take up more wealth creation ventures i.e. Tertiary Institution students have higher

tendencies to earn a higher income. To reasonably conduct this study within the time frame

and resources available to us we will only be focusing on Undergraduate students of the

University of Lagos (UNILAG). The student community is unique demography to study because

of the massive potentials embedded in their ability to generate higher income after receiving

the investment of Education. They are believed to be able to get better-paying jobs, create

profit-making ventures, take up loans, construct houses and/or take up mortgage loans, and

many more after receiving this education. It is thus important that we study their attitude

towards savings as well as their knowledge of savings now which can then be used as a

precursor of determining future behaviors.

AIM OF THE STUDY

Numerous research has been conducted to study the determinants influencing private savings.

However, the student demography and their attitude towards savings have received little or no

attention.

Thus, this study seeks to increase the body of knowledge about students saving with a focus on

studying the behavioral patterns that dictate or influence their attitude towards saving and

holding financial instruments.

We hope at the end of the projects we help the government make more informed policy

decisions and also help private institutions understand better this student demography who are

their customers.

RESEARCH QUESTIONS AND OBJECTIVES

The objectives of this study are to explore the behavioral attitude of students in tertiary

institutions towards savings, their motivations, and how they behave concerning making

investment decisions. Emphatically the objectives are stated below:

 To Examine the attitudes of Undergraduate students towards savings.

 Determine the factors that motivate students in tertiary institutions towards savings.

 Examine the attitude of students in tertiary institutions towards investments in the long

and short term.

To best understand the behavioral pattern of students towards saving, we have raised the

following researches questions

 What attitude do students have towards savings?

 What motivates students to save?

 What is the attitude of students towards investment?

To carry out this study we will be making use of some Economics theories as well as

psychological theories to study the Behavioral patterns of students towards savings. Thus, the

next section of this study will contain a Theoretical review of Literatures, Methodology that will
be deployed in this study, Research results and Analysis, and Conclusions and

recommendations.
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