Incorporating Private Savings Behavior in Product Offerings: A Case Study of Pakistan

Abstract

In order to enhance understanding about the actual savings behaviour and impulses which drive savings behaviour, it is interesting to study the micro foundations of savings behaviour. Collecting micro data through filled questionnaire from households in urban areas, this study identifies the motives of savings and the instruments and channels where the savings are invested in Pakistan. The results reveal that investment motive, higher income and greater frequency of household members joining labor force for earning incomes enhance the monthly savings rate. The results can be used to offer Islamic investment deposits in an attractive way. If the investment deposits are pitched properly by highlighting the stable ex-post investment returns and low ex-post volatility, then people with an investment motive parking their savings in fixed income mutual funds would be attracted towards Islamic investment deposits. Likewise, incremental long term savings plans wherein periodic investments increase over a period of time can be offered given that monthly savings rate are found to be positively associated with income. Finally, joint investment accounts can be offered given the finding that monthly savings rate is higher in households with greater number of earning members in family.JEL Classification: G11, G21, G23How to Cite:Shaikh, S. A. (2021). Incorporating Private Savings Behavior in Product Offerings: A Case Study of Pakistan. Signifikan: Jurnal Ilmu Ekonomi, 10(2), 247-258. https://doi.org/10.15408/sjie.v10i2.20139.