Abstract:
A stable financial system creates a favorable environment for depositors and investors
and encourages financial institutions and markets to function effectively and
efficiently for promoting investment and economic growth. The maintenance of
financial stability creates a trust-worthy environment to savers and investors. The
banking sector and insurance sector are treated as safe and secure twin pillars for
savings and investments. Bank Interest rate is the reward for depositors and investors.
Lower interest rate makes savings less attractive and alternatively, a lower interest
rate may encourage other forms of savings and investments. The problem of this study
is “does the bank interest rate influence the consumer buying behavior of life
insurance products?” Accordingly, the objective of this study is to examine the
relationship between bank interest rate and the demand for life insurance products. In
this study, both secondary and primary data collected from a sample of 200
households selected through stratified random sampling technique were used and the
data was analyzed using quantitative statistical techniques. The results revealed that,
out of six alternative investment sources 66 per cent of the households most prefer to
invest in fixed deposits in banks and only 4 per cent of them prefer to invest in life
insurance. Results revealed that 81 per cent of them agree that bank interest rate
directly affect their buying behavior of life insurance products. Accordingly, it can be
concluded that, interest rate of the banks affects the consumer buying behavior of life
insurance products.
