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

Abstract

Saving is the fraction of income not instantly consumed but kept for future investment, consumption or for unforeseen contingencies in the future. The aim of this study was to investigate the saving behavior of household and determinants of saving in the district using primary data from 249 samples of household. The analysis used descriptive and inferential analysis to achieve the objective the study. The descriptive part showed that about 14.5% of the household were not saving in financial institutions whereas about 85.5% saved in financial institution. The chi-square test of association revealed that Age of household head, education level of household head, main occupation, knowing about the interest rate of financial institution, having farm land, getting advice about saving were significantly associated the saving status of households. Additionally, the logistic regression showed that age of household, main occupations, knowing about interest rates, income of households and family size were significant determinants of households saving status. In order to enhance the households saving status in financial institutions, the district, the Oromia regional state and the government financial sectors should work on awareness creation about saving and increase the income of the household.

Antecedents of Savings Behaviour Among Rural Households: A Holistic Approach

“…However, some have claimed age of head of household as one of the effective determinants of savings. 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 Role of Financial Institutions in Smallholder Agriculture Development:Ethiopian Context

“…Omo MFI is found in reaching the excluded poor in remote areas through group lending schemes and improving the clients' income, productive asset holdings, access to various social services in Wolaita Zone (Daniel, 2014). Besides, 85.5 percent of the smallholders were found to be saveing in the MFIs in Derra District of Oromiya region (Zeleke & Endris, 2019) due to its advantages over other formal institutions.…”