The effect of higher inflation on real savings contradicts theory and negates the presence of a precautionary motive for savings in Egypt. This can be attributed to seeking alternative non- formal inflation hedges particularly in real estate and gold. This is common in LDCs that suffer financial market imperfections. Unavailability of robust data on real estate holdings and gold prices in the domestic market limit the interpretation of this result and raise a feasible research question for future development of this model.

Exchange rate movements reflect on higher private savings. It provides signals of macroeconomic uncertainty to economic agents and triggers precautionary motive for savings. In the absence of data on domestic and foreign currency denominated private savings, devaluation would reflect on raising the domestic currency equivalence of foreign currency savings leading to a net positive effect of devaluation on private savings.

Relevant policy recommendations are imperative to the betterment of the Egyptian economic narrative. A multitude of sources indicate that trust is a significant determinant of saving; in other words, it has been observed that individuals who perceive that the economic situation within their country will improve are more likely to save. Moreover, regression analysis illustrates that trust in deposit safety and financial stability is highly correlated with trust in one’s government; therefore, an individual who trusts the institutions within their country is likely to save. With that being said, it is imperative that Egypt builds creditability as well as maintains integrity in their financial institutions in pursuit of building trust to ultimately increase savings.

In addition to trust, Internet access is significant to savings behavior whereas physical access and distribution of banks does not have an effect on one’s probability of participation in bank savings and/or on informal savings. In many underdeveloped countries, information barriers are generally associated with higher costs. With that being said, improvements in Internet access lower transaction and information costs for stock market participation; thus increasing the likelihood of savings as well as helping a consumer make better financial decisions. However, one must be financially literate to reap the benefits cultivated from access to the Internet. Increasing Internet access within Egypt could be pivotal to savings behavior; however, it should also be noted that it would only assist a specific cohort of individuals.

Furthermore, the inception of funded private pension systems schemes within Europe and Central Asia have been pivotal to savings behavior. Essentially, a pension system encourages savings within the workplace to ensure adequate income for workers during retirement. However, regulatory requirements and misguided strategies have reduced the yield of such investments as well as impeding on the overall objective of private pensions. Appropriately positioning a mandatory pension system within Egypt could dynamically alter savings behavior; however, it is recommended that more research should be conducted in regards to regulatory requirements prior to implementing such policy.

21