Financialization and Households Gross Saving Rate

Besides the impact on private consumption, we have also analyzed whether households’ financialization process may have affected households’ savings. Therefore, in this subsection we have analysed the impact of the changes in the components of the financial balance sheets of households (that is, the change measured as a percentage of the GDP of net financial assets, financial assets, and financial liabilities of non-financial corporations) on the households’ saving rate. Thus, the dependent variable has been the absolute variation of households’ gross saving rate (St-St-n).

Data on national savings rates have been obtained from the AMECO database, and the variable used has been the households’ gross saving rate, that is, the gross savings as a percentage of the households’ gross disposable income.

Data on households’ gross saving rate is not available for Malta, and, therefore, we only have 18 observations or countries. Furthermore, data for Luxembourg are only available since the year 2006. As a result, the first year of the period before the Great Recession is 1999, with the exception of Ireland and Slovenia (starting in 2001), Latvia (starting in 2004), and Luxembourg (starting the year 2006).

Before the year 2008, we have only found a significant direct relationship between the change in the households’ gross saving rate and the change in net financial assets (see Table 3.6). Between 1999 and 2008 gross saving rates in the Eurozone fell, on average, by 0.4 percentage points.

Table 3.6 OLS estimation results. Dependent variable: Change of

Households' Gross Saving Rate (1999-2008)

Variable

AGross saving rate

Constant

0.892 (0.437)

Net Financial Assets

0.05 (0.059)

R2

0.205

F-statistics

4.130 (0.059)

Durbin-Watson

2.76

Jarque-Bera

statistics

6.474 (0.039)

p-values in parenthesis

Table 3.7 OLS Estimation Results. Dependent Variable: Change of Households' Gross Saving Rate (2008-2014)

Variable

AGross saving rate

Constant

-0.13 (0.959)

Assets

-0.115 (0.084)

AR (1)

0.171 (0.533)

R2

0.23

F-statistics

2.046 (0.166)

Durbin-Watson

1.82

Jarque-Bera statistics

1.354 (0.508)

p-values in parenthesis

Households’ net financial assets declined on average by 25.6 percent of the GDP. Therefore, by itself, the decline in the households’ net financial assets would have generated a fall in the savings rate amounting to 1.3 percentage points (higher than the registered fall), which can give us an idea of the significant impact of the decline of household’s net financial wealth on the savings rate.

However, when we analyse the determinants of the change in gross saving rate during the Great Recession, the only significant relationship is with regard to the change of households’ financial assets.

Table 3.7 shows the result of the OLS estimation. During the Great Recession, only the change in the size of financial assets had a significant impact on the change of households’ gross saving rate. According to this estimation, the larger size of financial assets (on average, they grew by 30.4 percent of the GDP) would have led to a decline in the gross saving rate in the years 2008 to 2014 (on average, households’ gross saving rate fell 3.6 percentage points)

 
Source
< Prev   CONTENTS   Source   Next >