Abstract:
The general objective of this research is to establish the effects of
financial innovations on financial savings in Ghana for the period
1963 to 2006. Both the perceptual index and M2=M1 that were
used as proxies for financial innovation exhibited a positive
long-run relationship but a negative short-run relationship. The
crux of the study was that financial innovations led to a reduction
in financial savings in the short run for one main reason—the prevailing
innovative products in Ghana encouraged withdrawals
rather than savings. Financial institutions, especially banks, are
therefore encouraged to develop savings-related innovative
instruments.
