Giavazzi et al.’s (2010) study explores the behavior of household savings using household-level micro data from the Egyptian Income, Expenditure and Consumption Surveys. Different from aggregate time series, the survey data clearly observed an immense reduction in household savings, from 14% in 2004/05 to 10% in 2008/09. The authors find evidence that indicates the reduction can be attributed to improvements in access to finance and credit. Moreover, they find a negative correlation between savings and measures of financial development. The study also suggests that the pension reform considered in Egypt—in which contributions to pension funds are compulsory--is less likely to result in the saving shortfall observed in other countries which left individuals the option of savings for retirement.

Love (2010) examines corporate savings in Egypt, which represents 50% of total savings. Her study focuses on two measures of corporate savings – financial savings and physical savings.<sup>7</sup> It employs two data sets - Investment Climate Assessment and data for publicly listed firms on EGX to analyze the determinants of corporate savings behavior. The study finds that larger firms invest more (physical savings), which is imperative to maintaining competitiveness and growth. Moreover, the study also concludes that small firms invest less because of their lack of access to credit. Therefore, improving access to credit for small and medium enterprises is likely to have a positive impact on investment. Furthermore, despite the financial deepening, the use of credit products observed a reduction during the last decade. The main policy recommendation from the study reaffirms the importance of improving access to financial services in Egypt. In addition, policies aimed at reducing macroeconomic volatility are likely to result in increased investment.

Touny (2008) shows that Egypt’s domestic savings ratio has an average of only 14.6 percent of GDP through the period 1980 - 2005, which is relatively low compared to other countries at a similar level of per capita income. He examines the long-run determinants of domestic saving rates in Egypt through the period 1975 – 2006 using unit root and co-integration tests, which allow for heterogeneity in parameters and dynamics. The results of the study show that domestic savings in Egypt is determined by the following factors: first, the growth of per capita income positively influences domestic savings in the short- and the long run. Second, the budget deficit ratio has a negative effect on the domestic savings ratio; in other words, higher government savings partially crowd out private savings, and thus, does not provide support to the existence of the Ricardian Equivalence. Third, financial depth, proxied by the increase in the ratio of broad money supply (M2) to GDP, illustrates a positive and statistically significant effect on domestic savings in the long run. Fourth, the real interest rate (RR) has a positive effect in the short-run; however, the effect of RR in the long run appears to be positive but statistically insignificant. Fifth, the inflation rate has a positive impact on the level of domestic savings in Egypt in both the short run and the long run. This provides support for precautionary motives for savings in the face of increased economic uncertainty in Egypt. Finally, the current account deficit has a negative and statistically significant effect in both the short and long run, implying that external savings may tend to act as a substitute to domestic private saving.

AL-Mashat (2006) assesses the effects of financial sector reforms on non-government savings in Egypt through the period 1970-1999. The quantitative outcomes of financial sector reforms are evaluated by comparing relevant indicators before and after the introduction of reform measures, and by analyzing the link between those indicators and the non-government savings rate. The

> 7 Physical savings represent addition to physical assets as investment in property, plant and equipment. Financial savings represent addition to financial assets, as increase in the firm‘s holdings of cash and marketable securities.

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