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26 Technium Soc. Sci. J. 1 (2021)

handle is hein.journals/techssj26 and id is 1 raw text is: Technium Social Sciences Journal Vol. 26, 1-16, December, 2021 ISSN: 2668-7798 www.techniumscience.com An assessment of interest rates on high income earners in South Africa Kometsi Kotlele1, E.I. Edoun2, Vinessa Naidoo3 Tshwane University of Technology, Pretoria, South Africa kkotmetsi@gmail.com', edounsen@hotmail.com2 Abstract. The globalisation phenomenon has enhanced relationship between economies in the world through free market and movement across borders. In such conditions, each government should properly manage and control exchange requirements at domestic and global level through implementation of relevant monetary policies to sustain economic development. Considering the impact of the currency and interest rates on expenditure and/or revenues, this study reports on the results of real interest rates on high income households in South Africa. The study employed the use of quantitative secondary data involving interest rates. Time series data sets on three independent variables over a period of twenty years arising from 1998 to 2018 was used. The data was collected from South African Reserve Bank (SARB) and Statistics South Africa (STATSSA). The statistical bulletins, annual reports and databases were used following permission from the relevant custodians of data from SARB and STATS SA. Data analysis was done using STATA software. The study employed the use of both correlation and linear regression methods of analysis on the changes recorded on how interest rates impact on the behaviour of households for the variables under observation and these are personal transport, household credit and durable goods consumed at the household level. Research findings revealed that a negative relationship exists between real interest rates as adjusted for inflation on the overall consumption of goods in the household level. Furthermore, an increase of the interest rates leads to a decrease in spending while the decrease of interest rates leaves more money in the households for increased spending in all areas of credit consumption and in this case all research variables under study increased with a decreased real interest rate. Keywords. Interest rate; regression analysis; households; consumer price index; monetary policy 1. Introduction The subject of interest rates has been discussed and written about exhaustively by many scholars around the world. However, there are still many opportunities for further studies in the field of economics and how it affects consumers and investors alike. In this research study, one critical area of macroeconomics on interest rates and how it affects the high-income households in South Africa has been investigated. The management of interest rates is crucial for the economic development through spending and saving behaviour of consumers and business as argued by Acha & Acha (2011). In a way it acts as a facilitator for the flow of funds between lenders and borrowers. Interest rates remains an economic aggregate managed by the central bank. The South African Reserve Bank (SARB) uses the monetary and interest rates policy for inflation targeting with the general mandate of preserving currency for attainment of macroeconomic development objectives of 1

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