Determinants of savings behavior: an analysis of the Lebanese experience from 1974 to 2000.

Summary Since 1991 and after 16 years of civil war, the authority of the Lebanese state has been gradually restored. Consequently, this long period of hostilities deteriorated the main aggregates of the Lebanese economy, causing the GDP to fall, the exchange rate to be fixed against the US dollar, strong inflationary currents, the reduction of purchasing power and the shrinking or even elimination of the middle class. This has stimulated an increase in poverty among the Lebanese population as a result of poor redistribution of national income. The substratum of this thesis will have been to address the savings factor and its relationship with growth. In addition, the effects of GDP, inflation and interest rates on savings have been analyzed and studied. Between 1974 and 2000, econometric analyses proved that the determinants of savings are GDP and inflation. Interest rates on deposits are the third most important factor. Between 1992 and 2001, additional studies were carried out and the following conclusions were reached: savings have a negative effect on investment and gdp because of the crowding out effect of a monumental public debt (185% of gdp). This situation is explained by the poor fiscal and monetary policies applied over the last decade. These policies have contributed to the increase in public debt, the unjustified increase in interest rates, the degradation of national production and consequently the impoverishment of the Lebanese population. The prominent conclusion of this research is that the decrease in the savings rate is a major obstacle to growth. Thus, a monetary policy that favors savings and imposes an appropriate budgetary and administrative management are strongly recommended.