THE DETERMINANTS OF HOUSEHOLD SAVINGS IN ETHIOPIA: THE CASE OF GURAGE ZONE GUMER WOREDA IN SOUTHERN REGIONAL STATE

Abstract

The study investigates the determinant of household in the study area. Household saving is one of the key components in any development arm n is believed to be the surest way of increasing income and reducing poverty. Understanding the determinants ofsavihg at household heads level helps to visualize appropriate response strategies in terms of targeted savings packages. The study had two specific objectives, namely to identifi/ the practice of household savings, and to investigate the major determinants of household saving. The data of 147 households have been collectedfi'om rural households by using interview schedule. The research has involved both qualitative and quantitative method. Purposive and random sampling techniques were employed in order to select the study sites within Gamer Wereda and study respondents, respectively. To collect the required primary source of data, instruments of data collection which include questionnaire was used. Secondary source ofdata were also carefully examined. This study used descriptive analysis and censored regression such as Tobit model. The result of the descriptive analysis showed that almost all of the sample households practiced saving and the common reasons for households hot to save was low income. The econometric analyses showed that income, age, family size, marital status, access to saving institution and location used for saving are significant determinants of household savings in the study area. Based on the results, it is recommended that institutions concerned should emphasize 0h livelihood interventions targeted to improve the household income which have a round eflect on savings and income growth, socio economic saving barriers, gender and education on the importance of saving and saving modalities, planning and expenditure controlling habit, investment and the economic growth