Self-employment, Broad Money, Interest Rates Spread and Their Impact on Savings: The Case for Kenya

Abstract

: This study investigated the relationship between Self-employment, Monetary policy, and Interest rates spread and the Gross national savings in Kenya between 2004 and 2018using Multiple regression model on IBM SPSS 26. The descriptive statistics showed a linear correlation between predictor and outcome variables using Auto Regressive Distributive Lag (ARDL) and Granger Causality method, further analysis revealed that of the three variables Broad Money Supply contributed most to the variance of the outcome at .762. The study therefore concludes there is a significant correlation between the three predictor variables and the outcome variable, and the model can be used for prediction purpose for forecasting. The paper recommends that the National Government eases the burden of the self-employed people in order that they may maximize their earnings in that sector especially as the owners of SMEs. Also, banks should be encouraged to have more innovative savings products. This will help the country have a locally developed savings culture that would support a nationally developed capital base. The paper recommends Government minimizes external borrowing so that more resources are directed to the private sector to help them grow the national wealth and create employment, while Banks be encouraged to pursue a modest interest rates spread.