THE ROLE OF SOCIAL CAPITAL ON HOUSEHOLD SAVING MOBLIZATION IN ETHIOPIA

Abstract

Saving is taken as an important variable in the theory of economic growth determining, both personal and national welfare. However, saving in Ethiopia is low and little is known empirically about its behaviour and factors affecting. This study aimed at investigating the role of social capital on households saving mobilization in Ethiopia. Secondary data obtained from Central Statistical Agency (CSA) survey was applied for the study. The survey included 3,830 national-level representative households that are selected from all regions of the country. Analysis were conducted using a combination of both descriptive and econometrics model. The result of Tobit regression model showed that education, ,total wealth index, household size, social networking, social trust, participation to edir and/or equb, participation to local association/mehaber were significant and had a positive influence on the status and extent of saving in Ethiopia. However, distance from banks and micro finances had negative effect on the status and extent of household saving. Therefore, it is recommended that the government and other concerned bodies need to deliver training for households so as to raise their level in social capital/ social relations and connections hand in hand with availing banks and microfinance at short possible distance so as to increase household saving.