RANSFORMING THE SAVINGS POTENTIAL OF THE POPULATION OF AZERBAIJAN INTO INVESTMENTS: CHALLENGES AND STRATEGIC APPROACHES

Abstract

The findings indicate that low real interest rates, the limited availability of long-term financial instruments, the underdevelopment of capital markets, weak trust in the financial sector, and low levels of financial literacy significantly constrain the effective transformation of savings into investments. In addition, under conditions of uncertainty, risk-averse behavior and a preference for liquid assets lead to the passive holding of savings.
The scientific novelty of the study lies in examining the savings–investment relationship not only from a macroeconomic perspective but also through the lens of behavioral economics and institutional trust. This approach provides a deeper understanding of why savings are not fully mobilized into the economic cycle and offers a new perspective on the application of existing theories in the national context. The practical significance of the research is reflected in the development of policy recommendations aimed at deepening capital markets, strengthening financial intermediation, expanding digital investment platforms, developing alternative investment instruments, and enhancing financial literacy. Overall, the effective transformation of household savings into investments is considered a key condition for ensuring sustainable economic growth, increasing financial system stability, and accelerating the development of the non-oil sector in Azerbaijan.