Effect of interest rate on savings behaviour among Ghanaians: evidence from Kumasi, Ghana.

Abstract The purpose of this paper is to explore how Ghanaians respond to changes in interest rate on savings. In other to effectively explain how changes in interest rate affect the savings behaviour among Ghanaians, the study administered 200 questionnaires and analysis of the data was done with descriptive statistics and chi-square test. The results show that, in general, changes in deposit interest rate loosely explain why people save. Again, decision to save with respect to changes in deposit interest rate depends on the knowledge the individual have on deposit interest rate and notices they receive from banks with respect to changes in deposit interest rate. The study further noted that, changes in income strongly explain the reasons why individual save. The chi-square result showed that, interacting knowledge on deposit interest rate with changes in interest rate may influence savings. Thus, increasing interest rate on deposit alone will not bring about increase in savings; however knowledge on the variable in question (deposit interest rate) is significant.