There are a number of factors that are termed as the determinants of savings. Some of these factors are the demographics of the particular region or country. At the same time, there are the income ratios that play an important role for the development or downfall of savings rate. Along with the income level, the production level or the productivity is also related to the savings rate of a country. Along with these, the factor of consumerism is also among the important determinants of saving rates.
Consumerism is dominating the modern society and because of the availability of numerous opportunities of borrowing, individuals are now able to spend as much as they like. Now, the increased availability of borrowing opportunities is stimulating the process of debt creation and because of this, individuals are saving less. This in turn is creating problems for the individuals as well as for the economy.
There are some other factors also that are related to the savings rate and can be termed as determinants of saving. Among these, there are the uncertainties that are related to the economies of almost every country and this is particularly true for the developing countries allover the world. Again, the price difference between the domestic goods and the foreign goods also influences the savings rate. Public Finance is another important factor for savings.
Some financial decisions of the public sector also play an important role as the determinants of savings. The percentages of children and old people are also among the determinants of savings. This section of a country's population is not expected to generate income. Because of this, the portion is dependent on the remaining part of the population for maintaining their livelihood. All these factors cause the saving capacity of the workforce to come down to a certain level.
At the same time, there are the factors like real interest rates and the inflation rates that are also among the important determinants of saving.
