Investigating the Impact of Firm Specific Determinants of Non-Pension Fund on Property Investment Decisions: An Evidence from Zanzibar Social Security Fund in Tanzania

Abstract

The aim of this study was to look at the impact of firm specific determinants of non-pension fund on property investment decisions, a case study of Zanzibar Social Security Fund (ZSSF) in Tanzania. The unit root test, co-integration, and vector error correction model (VECM) were used for estimation in the linear econometric model equation, which looked at the impact of three firm specific determinants of non-pension fund on property investment decisions: urbanization (URB), inflation rate (INF) and interest rate (IR). The estimated result showed that, there was presence of long-run relationship at equilibrium between property investment decisions (PID) in ZSSF and all tested determinants of property investment decisions. The results revealed that urbanization (URB) had positive significant long run relationship with property investment decisions in ZSSF. But it was further revealed that the inflation rate (INF) and interest rate (IR) had negative relationship with PID at ZSSF, though they were statistically significant. The results also revealed unidirectional causality relationship whereby PID causes IR. Furthermore, the results revealed unidirectional causal relationship from URB to PID at 5% level of significant. However, the result revealed that PID and INF were not granger cause each other in a short run. The study then recommends among others, that management of ZSSF has to consider these determinants when they make property investment decisions, this including, the need for management of Zanzibar Social Security Fund to work together with financial institutions like banks to develop a working formula on how they can facilitate mortgage facility at reasonable rate for residential and commercial properties, this will help to increase demand for real estate to society.