A Study on the Relationship between Saving Deposits of Commercial Banks and Gross Domestic Product: From the Period 2015-2016 to 2021-2022

Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 76 A Study on the Relationship between Saving Deposits of Commercial Banks and Gross Domestic Product: From the Period 2015-2016 to 20212022 Sammed Kunne, Lecturer, KLE Society’s, Lingaraj PU College of arts and science, Belagavi Manuscript ID: JRD -2025-170117 ISSN: 2230-9578 Volume 17 Issue 1|(III) P p76-79 January 2025 Submitted: 01 Dec. 2024 Revised: 24 Dec. 2024 Accepted: 20 Jan. 2025 Published: 31 Jan. 2025 Abstract The objectives of the paper are to know about the relationship between saving deposits of commercial banks and GDP and to assess the effect of saving deposits of commercial banks on GDP. To achieve the objectives, secondary data is collected from the period 2015-2016 to 2021-2022 through Handbook of Statistics on the Indian Economy. Karl Pearson’s Coefficient of Correlation and Multiple Regression OLS (Ordinary Least Square) Model techniques are used. From the analysis, it is cleared that there is a strong and significant relationship between GDP and Saving Deposits of Commercial banks and saving deposits of commercial banks & GDP are dependent and saving deposits of commercial banks has significant effect on GDP. Key Words: Commercial Banks, GDP, Saving Deposit. Introduction Investment contributes to growth in aggregate wealth. Nevertheless, an increase in investment cannot occur without an increase in saving. Savings thus play a significant part in supplying the country's capacity for production and investment, which will impact the potential for economic growth. Savings play a significant role in influencing economic growth. The most important macroeconomic factors are a healthy rate of savings combined with effective capital formation. India’s aggregate savings rate is comparable to that of emerging economies like Indonesia, Thailand and significantly higher than those of advanced economies such as the U.S and U.K. Over the past few decades (till 2012), there has been a sharp increase in Indian savings rate. The story of India's growth has been significantly influenced by its high domestic savings rate. More overall savings would result in larger investments and faster Economic growth. Review Of Literature 1. Ribaj and Mexhuani (2021), the data was collected from 2010 to 2017. The results showed that the deposits have a significant positive impact on Kosovo’s economic growth. The paper also confirmed that countries, where saving rate is high and not dependent on foreign direct investment, the risk arising from volatile foreign direct investment decreases significantly. 2. Jagadeesh (2015), the study investigated the role of savings in economic growth in Botswana. The study tested the stationarity and co integration of Botswana’s for the period of 1980 to 2013. The study found out that there is significant relationship between savings and economic growth. 3. Kumar and Chahuan (2015), the paper highlighted the impact of total saving deposits with commercial banks on Indian GDP in context with Pradhan Mantri Jan Dhan Yojna. The study covers 40 financial years (1975-76 to 2013-14). The results are confirmed that saving deposit with commercial deposit and GDP (Gross Domestic Product) were not stationery at level but they became stationery after the first differences. Quick Response Code: Website: https://jrdrvb.org/ DOI: Access this article online This is an open access journal, and articles are distributed under the terms of the Creative Commons Attribution 4.0 International, The Creative Commons Attribution license allows re-distribution and re-use of a licensed work on the condition that the creator is appropriately credited Address for correspondence: Sammed Kunne, Lecturer, KLE Society’s, Lingaraj PU College of arts and science, Belagavi How to cite this article: Sammed Kunne. (2025).A Study on the Relationship between Saving Deposits of Commercial Banks and Gross Domestic Product: From the Period 2015-2016 to 2021-2022. Journal of Research and Development,76-79 Original Article Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 77 The granger causality test results showed that there is no relationship on the basis of causality was found from saving deposits with commercial banks to GDP. So, it is difficult to say that by the introduction of Pardhan mantra Jan dhan Yojna will significantly contribute towards the GDP. 4. Sharma and Ranga (2014), highlighted the impact of total saving deposits with commercial banks on Indian GDP. The study covered 13 financial years from 2000-2001 to 2012-2013. The study exhibited the strong positive correlation between saving deposits with commercial banks (r= 0991) & GDP and saving deposits with commercial banks had a significant impact on GDP. The study found out that there is significant relationship between savings and economic growth. 5. Turan and Gjergji (2014), the study aimed to indicate casual relationship between savings and economic growth in Albania between the years 1992 to 2012. The results revealed that savings and economic growth are co integrated. The study also revealed a positive relationship between savings and economic growth and the complementary role of foreign direct investment in growth. Objectives Of The Paper The objectives of the present study are1. To know about the relationship between saving deposits of commercial banks and GDP. 2. To assess the effect of saving deposits of commercial banks on GDP. The Hypotheses Of The Study Null Hypotheses 1. Ho1 = There Is No Significant Relationship Between Saving Deposits Of Commercial Banks And GDP. 2. Ho2 = There Is No Significant Effect Of Saving Deposits Of Commercial Banks On GDP. Data Collection To achieve the objectives, secondary data is collected for 7 years (from the period 2015-2016 to 2021-2022) through Handbook of statistics on the Indian economy. For the present study, saving deposits (Indian banks and foreign banks deposits, both) of commercial banks and GDP are considered. Tools And Techniques Karl Pearson’s Coefficient of Correlation and Multiple Regression OLS (Ordinary Least Square) Model techniques are used to analyze the data. For analysis, saving deposits (Indian banks and foreign banks deposits, both) of commercial banks is taken as independent variable and GDP as dependent variable. Analysis And Interpretation Of Data Table 1: Saving Deposits and GDP. Years Saving Deposits with Commercial Banks (Amount in Crore) Gross Domestic Product (Amount in Crore) 2015-2016 25,36,544 1,37,71,874 2016-2017 33,93,583 1,53,91,669 2017-2018 36,55,237 1,70,90,042 2018-2019 40,31,177 1,88,99,668 2019-2020 43,50,746 2,00,74,856 2020-2021 50,55,807 1,98,00,914 2021-2022 56,81,318 2,36,64,637 Source: Handbook of Statistics on the Indian Economy. Figure 1: GDP and Saving Deposits 20152016 20162017 20172018 20182019 20192020 20202021 20212022 Gross Domestic Product (Amount in Crore) 13,771,874 15,391,669 17,090,042 18,899,668 20,074,856 19,800,914 23,664,637 Saving Deposits with Commercial Banks (Amount in Crore) 2,536,544 3,393,583 3,655,237 4,031,177 4,350,746 5,055,807 5,681,318 0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 Saving Deposit and GDP Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 78 Ho1 = There is no significant relationship between saving deposits of commercial banks and GDP. Table 2: Correlation Coefficient Correlations GDP Savings GDP Pearson Correlation 1 .964** Sig. (2-tailed) .000 N 7 7 Savings Pearson Correlation .964** 1 Sig. (2-tailed) .000 N 7 7 **. Correlation is significant at the 0.01 level (2-tailed). Source: Calculation through MS Excel Analytical tool Karl Pearson Correlation Coefficient technique is used to study the relationship between dependent (GDP) and independent variable (saving deposits of commercial banks). It is depicted from the table 2 that there is a strong positive correlation between the variables i.e. r = .964 which is significant at 1 percent level of significance. It means GDP increases with the increased saving deposits. The p value related to correlation between the variables is less than 0.05. So, null hypothesis Ho1 is rejected. It means, there is a strong and significant relationship between GDP and Saving Deposits of Commercial banks. Ho2 = There is no significant effect of saving deposits of commercial banks on GDP. Table 3: Coefficients Unstandardized Coefficients Standardized Coefficients t Sig. Model B Std. Error Beta 1 (Constant) 6005886.195 1564267.457 3.839 .012 Saving Deposits 3.019 .371 .964 8.133 .000 a. Dependent Variable: GDP Source: Calculation through MS Excel Analytical tool. GDPi = b0+b1 saving deposits with commercial banksi = 6005886.195+ 3.019 saving deposits with commercial banksi The table 3 shows the estimated value of b-values (unstandardized coefficients). The positive value exhibits the positive relationship. The value b = 3.019, makes it clear that if saving deposits of commercial banks increases with unit 1, then GDP increases by 3.019 units. The p value of saving deposits of commercial banks is less than 0.05. So, null hypothesis H02 is rejected. It means saving deposits of commercial banks and GDP are dependent and saving deposits of commercial banks has significant effect on GDP. Table 4: Model Summary R Model R Square Adjusted R Square Std. Error of the Estimate Change Statistics DurbinWatson R Square Change F Change df1 df2 Sig. F Change 1 .964 .930 .916 955212.70107 .930 66.148 1 5 .000 2.616 a.Predictors: (Constant), Savings Deposits b.Dependent Variable: GDP Calculation through MS Excel Analytical tool. In table 4, value of R exhibits the multiple correlation coefficients between the dependent and independent variable. Value of R is .964; it means there is a strong correlation between GDP and Saving Deposits of Commercial Banks. Value of R2 exhibits that how much the variability in GDP is accounted for the saving deposits with the commercial banks. The value of R2 = .930 depicted that saving deposits with commercial banks accounts for 93 percent variations in GDP. Conclusion: The study concluded a strong positive relationship (r = .964) between saving deposits with commercial banks and nation GDP. The study also exhibited that saving deposits with commercial banks is the one of the important predictors of GDP with the R Square value of .930. GDP growth rate is perhaps the single best predictor of economic Journal of Research and Development Peer Reviewed International, Open Access Journal. ISSN : 2230-9578 | Website: https://jrdrvb.org Volume-17, Issue-1(III) | January - 2025 79 growth, because it accurately measures the size of an economy. Increased domestic saving is one of the requirements for placing India on a high development path. It is unlikely that traditional tax and interest rate incentives will have a significant impact on the private saving rate. Instead, increasing public saving and a robust structural reform programme, including financial liberalisation, are the most promising ways to enhance domestic saving, as they would start a positive feedback loop in which further increases in private saving would be prompted by higher growth. Particular focus should be given to long-term saving mechanisms to improve the effectiveness of savings allocation and finance the significant infrastructure demands of the Indian economy. The government needs to reduce its own spending or increase revenue to contribute more to national savings. Implementing financial liberalization and other economic reforms can create an environment that encourages private savings. Promoting long-term saving mechanisms can improve the efficiency of savings allocation and fund crucial infrastructure projects. References: 1. Jagadeesh, D. (2015). The impact of savings in economic growth: An empirical study based on Botswana. International Journal of Research in Business Studies and Management, 2(9), 10–21. 2. Kumar, S., & Chauha, S. (2015). Impact of commercial deposit in banks with GDP in context with Pradhan Mantri Jan Dhan Yojna. BVIMSR’s Journal of Management Research, 7(1), 53–59. 3. Mühleisen, M. M. (1997). Improving India’s saving performance. International Monetary Fund. https://www.imf.org/external/pubs/ft/fandd/1997/06/pdf/muhleise.pdf 4. Rasmidatta, P. (2011). The relationship between domestic saving and economic growth and convergence hypothesis: Case study of Thailand. DIVA Portal. http://www.divaportal.org/smash/get/diva2:425833/ATTACHMENT01.pdf 5. Ribaj, A., & Mexhuani, F. (2021). The impact of savings on economic growth in a developing country (the case of Kosovo). Journal of Innovation and Entrepreneurship, 10(1), 1–13. https://doi.org/10.1186/s13731-020-00140-6 6. Saikia, S. (2018). Investment pattern of youth in India with particular reference to Mumbai. 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