Developmentthat speculative activities when exchange rateis unstable, diverts resources away from thefinancial market to saving in hard currencies.Real rate of interest has a significantimpact on savings ratio. <strong>The</strong> coefficient ispositive and significant at 5 percent. This isconsistent with studies by Mckinnon and Shawhypothesis that private saving is significantlyand positively interest elastic in developingcountries. This contrasts with the findings ofAjakaiye & Odusola (1995) that real depositrate maintains a negative relationship withfinancial savings ratio. One reason for thedifferent result may be the ‘prevalence ofnegative real rate of interest’ during theperiod under consideration for the Ajakaiye& Odusola study. While their period of studywas quarterly data for, 1980-1993 data for thisstudy however was based on a longer period,1970-2007, using annual data. <strong>The</strong> fact thatannual series may not explicitly show thedynamics of the developments in the financial system during theperiod may also account for the differences in results. Other policyissues which affects the responsiveness of private savings to realdeposit rate is the relationship between government deficits andcurrent account of the balance of payment. Changes in publicsavings (increases or decreases in budget deficit or surplus) mayhave impacted significantly on domestic rates of return. <strong>The</strong> resultshows that foreign saving serves as a complement to domesticfinancial savings and is statistically established at 5 per cent level.<strong>The</strong> dummy variable showed an insignificant negativerelationship with savings ratio. <strong>The</strong> interest rate deregulation didnot contribute much to the level of savings in the economy. <strong>The</strong>reason for this level of insignificance may be due to the volatilityof interest rates during the period of deregulation, which mighthave impacted negatively on savings and the high rate of inflationand as such discouraged savings. <strong>The</strong> level of uncertainty and thelack of confidence in the formal financial institutions, particularlyin times of distress, could also impact negatively on savingsmobilisation. Such that no matter how high and attractive theinterest rates may be households will prefer to invest on realassets rather than on financial assets.SUMMARY AND CONCLUSIONThis paper addresses the issue of the relevance of interestrate deregulation to savings in Nigeria. A single equation modelwas specified to test the interest elasticity of savings and othervariables. <strong>The</strong> exercise showed a positive relationship betweenreal interest rate and savings ratio but a negative correlationwith the dummy variable that was used as proxy for the period ofinterest rate deregulation.<strong>The</strong> main conclusion that emerges from this analysis is thatinterest rate deregulation will only achieve its role of savingsmobilisation if appropriate macroeconomic policies are put inplace. For example, attaining real positive interest rate is difficultwhen inflation is high. In addition to macroeconomic stability,a sound banking system is important. <strong>The</strong> need for effectiveprudential supervision of financial institutions to prevent crisis that‘ <strong>The</strong> need foreffective prudentialsupervision offinancial institutionsto prevent crisisthat erodes publicconfidence in thebanking sector isimperative if domesticsavers are to beattracted‘erodes public confidence in the bankingsector is imperative if domestic savers areto be attracted.REFERENCES1. Adofu, I.; M. Abula; and S.I. Audu(2010), An Assessment of the Effects ofInterest Rate Deregulation in EnhancingAgricultural Productivity in Nigeria.Current Research Journal of Economics<strong>The</strong>ory 2(2): 82 – 86, ISSN: 2042 – 485X,(C) Maxwell Scientific Organisation.2. Ajayi, S.I. (1978), Money in aDeveloping Economy: A PortfolioApproach to Money SupplyDetermination in Nigeria, IbadanUniversity Press.3. Alao, R.O. (2010), InterestRates Determination in Nigeria: AnEconometric X-RAY, InternationalResearch Journal of Finance and Economics, ISSN 1450 – 2887,Issue 47, http://www.eurojournals.com/finance.htm4. Central Bank of Nigeria, Monetary, Credit, ForeignTrade and Exchange Policy Guidelines for 1999 Fiscal Year(Monetary Policy Circular).5. Elumelu, Tony (2002), Interest and Exchange RateManagement in Nigeria: A Macroeconomics Implication, Aspeech delivered at the Inaugural lecture of the Alumnus GuestLecture Series of the Department of Economics, Ambrose AlliUniversity, Ekpoma on June 24.6. Gupta, K.L., (1970), Personal Savings in DevelopingNations: Further Evidence, Economic Record 46, June, Pages243-249.7. Mckinnon, R.I. (1970), Money and Capital in EconomicDevelopment, Washington D.C., <strong>The</strong> Brooking Institute.8. Ndekwu, E.C. (1991), Interest Rates, Bank Deposits andGrowth of the <strong>Nigerian</strong> Economy, NISER Monograph, Series4, Ibadan, NISER.9. Onyido, B.C. (1997), Interest Rates Policies in ECOWASCountries: A Comparative Analysis, Bullion of Central Bank ofNigeria, Vol. 21, No. 4, Oct./ Dec.10. Ojo, M.O. (1997), A Review and Appraisal of theMonetary and Other Financial Policies in the FederalGovernment Budget, Bullion of CBN, Vol. 21, Jan./March.11. Reinhart and Ostry (1995), Savings and Real InterestRate in Developing Countries, Finance and Development, IMFand World Bank Quarterly Report, Oct./Dec.12. Research Department (1998): Central Bank of NigeriaBriefs, 1998 Series, June.13. Mehran and Laurens, Interest Rates: An Approachto Liberalisation, Finance and Development, IMF and WorldBank Quarterly Report.14. Shaws, E.S. (1973), Financial Deepening in EconomicDevelopment, New York, Oxford University Press.* Dr. Chris Ehinomen and Dr. Adepoju Adeleke areLecturers in the Department of Economics and BusinessStudies, Redeemers University, Mowe, Ogun State.THE NIGERIAN ACCOUNTANT 64<strong>October</strong>/<strong>December</strong>, <strong>2012</strong>
News/EventsFIRS Is Doing a Great Job— ICAN President<strong>The</strong> 48 th President of ICAN, Mr Doyin Owolabi haddescribed the Federal Inland Revenue Service(FIRS) as an organisation doing a great job thatwould go a long way in showing the whole worldthat Nigeria is a serious country.Owolabi said the in Abuja when he paid acourtesy visit to the office of the Chairman of FIRS.According to him, FIRS had made Nigeria to realisethat it could not depend solely on oil and externalrevenue alone as a means of survival. He alsothanked FIRS for partnering with ICAN in movingthe nation forward.Responding, the acting Chairman of FIRS Mr.O.C. Chuke described ICAN’s visit to the office asa privilege and congratulated ICAN President onhis election as the 48 th President of <strong>The</strong> Institute.He promised that FIRS would continue to worktogether with ICAN to take Nigeria to greater heights by buildingenduring institutions.I Solicit Support of ICAN, Says AGF<strong>The</strong> <strong>Accountant</strong>-General of the Federation, Mr Niyi Otunla, FCA,has called on <strong>The</strong> Institute of Chartered <strong>Accountant</strong>s of Nigeria(ICAN) for support in order to make the work in his office easier.Otunla made this call while receiving the 48 th ICAN President,Mr Doyin Owolabi and his entourage in his office in Abuja. Hethanked ICAN for the support it had been offering in the area ofprovision of qualified personnel to his office.In his reaction, the ICAN President intimated to Mr Otunla thewhistle-blower Bill which <strong>The</strong> Institute was planning to sponsor oncorruption. He also solicited the support of the <strong>Accountant</strong>-Generalon it. While thanking him for his support to ICAN members in hisoffice, Owolabi implored him to continue assisting the membersby sponsoring them to ICAN programmes and events.ICAN President, Doyin Owolabi (left) with <strong>Accountant</strong>-Generalof the Federation, Mr Niyi OtunlaICAN President, Doyin Owolabi presenting souvenir to Acting Chairman, FederalInland Revenue Service (FIRS), Mr O.C. ChukeI Will Sell ICAN’s Whistle-BlowerCampaign Against Corruption— Gov. FayemiEkiti State Governor, Dr Kayode Fayemi has commended thedecision of <strong>The</strong> Institute of Chartered <strong>Accountant</strong>s of Nigeria(ICAN) to sponsor a Whistle-Blower Bill against corruption,promising to sell it to the National Assembly.Fayemi gave this assurance in his office while receiving the48 th ICAN President, Mr Doyin Owolabi who paid him a courtesyvisit. He said that ICAN’s decision to sponsor such Bill was a stepin the right direction, adding that professionals like Chartered<strong>Accountant</strong>s and others were expected to be at the forefront ofthe struggle against corruption.“Our country needs this. Chartered <strong>Accountant</strong>s are not surfacepeople, they give attention to details and there is no way anybody,organisation or government can do without them. <strong>The</strong> whistleblowercampaign is the right step and I will sell it.”“I live by example. When I took over as Ekiti State Governor, Ideclared my assets openly. So, I don’t see a reason why a publicoffice holder should be afraid to do so openly if he doesn’t havea hidden agenda. <strong>The</strong> word ‘declare’ itself means doing thingsopenly to let people know,” the governor expatiated.Speaking further, he commended ICAN for turning out goodproducts and promised that the tie between <strong>The</strong> Institute andEkiti state will continue to wax stronger. He also declared thatrecruiting over 50 Chartered <strong>Accountant</strong>s into the service of thestate was not a mistake but a deliberate action to ensure probityand accountability.Earlier, Owolabi had told the governor that he was on afour-day tour of Ado-Ekiti District of the Institute to have firsthandinformation about the challenges facing ICAN members indischarging their responsibilities to the users of their services.He commended Governor Fayemi for the good works he wasdoing in the state and encouraged him to continue for the benefitof the people of the state. He also applauded him for employingTHE NIGERIAN ACCOUNTANT 52<strong>October</strong>/<strong>December</strong>, <strong>2012</strong>