Determinants of Urban Household Saving Behavior in Ethiopia: A Survey Study in Mekelle City

Abstract

This study is conducted under the title "Determinants of Urban Household Saving Behavior in Ethiopia." Its main objective was to empirically investigate the determinants of urban household saving behavior in Mekelle city, Ethiopia. Crosssectional primary data was collected using self-administered open-ended and closedended questionnaires from 150 households from seven sub-cities of Mekelle city. Selection of the sample was by two stage stratified sampling techniques, where the first stage units were sub-cities and the second stage units were the households. Descriptive statistics and binary logistic regression model was used to test the formulated hypotheses. The study found that household headed by a female, total income of household, and saving experience had a positive and significant impact on household saving. However, age of the household head, additional earner in the household, and dependency ratio of the household had a negative and significant influence on household saving. The governing saving motive found in this study was precautionary motive. The study recommended that government in collaboration with financial institutions should promote household saving by introducing different packages of prize-linked promotional savings; government should continue and spend the utmost effort to stabilize inflationary pressures using short-term and long-term strategies; and, government should strive to increase the disposable income of households. This study focused on household saving using only financial saving and employed smaller sample and binary logit regression model. Thus, further research may be undertaken to incorporate larger samples by employing other econometric models such as Heckman sample selection model and OLS regression models.

Household Saving Behavior and Determinants of Savings in Financial Institutions: The Case of Derra District, Oromia Region, Ethiopia

“…Income of the household significantly influence the saving status of the households at 5% level of significance and as the income the household increase by one unit, the households not saving decrease by .999 times , keeping other factors constant. This finding was in line with previous study done by Bizuneh (2011) (2017) and Saliya, A. Y.…”

“…Ages of household head was significantly affect saving status of the households at 5% level of significance and the odds not saving for the household head who aged 26-35 and 46 and above was 6.22 and 2.78 times higher than those who aged 18-25, respectively, keeping other factors constants. This finding was in line with the previous study done by Quartey & Blankson, (2008), Bizuneh (2011), Njung'e (2013, Michael (2013), Girma et al (2013), Mirach and Hailu,(2014), Bogale Y. et al (2017 and Saliya, A. Y.…”

“…In Ethiopia different studies were done and identify the different factors related to the households saving behaviors such as Mirach and Hailu,(2014) study showed 54.1% of sample households practiced saving and the common reasons for households not to save are low income, inflation, low interest rate, cultural background, education, social affairs and unemployment. In addition, study by Bizuneh (2011), Mirach andHailu (2014), Halefom (2015) and Saliya A. (2018), using tobit model showed that income, age, sex, education and forms of institutions used for saving are significant determinants of household savings.…”

Antecedents of Savings Behaviour Among Rural Households: A Holistic Approach

“…For instance, Zeleke and Endris (2019) claim that households’ head’s age has a significant impact on household savings status and the odds for non-saving households’ head’s aged 26–35 and 46 and above were 6.22 and 2.78 times higher than those aged 18–25, respectively. On the other hand, in case of female-headed households, Saliya (2018) found total-household income and savings experience has a positive and significant impact on household savings. The age of the head of household, the additional household earner and the household dependency ratio also has an impact on household savings.…”