DETERMINANTS OF SAVING BEHAVIOUR OF DAILY LABORERS: A CASE STUDY OF SEBETA TOWN, OROMIA ETHIOPIA

Abstract

The general objective of the study was to identify the determinants of the saving behavior of daily laborers in Sebeta Town. More specifically, the study aims to identify the effect of family size, daily incomes, financial literacy, peer influence, education level, and socialization as factors of saving behavior of daily laborers in Sebeta town. Primary data have been collected from 208 daily laborer working in Sebeta town drawn using a convenience sampling method and the data collection was self-administered using structured questionnaires. The findings revealed that there is positive and significant causal relationship between amount of saving and income, financial literacy, level of education, and socialization of the respondents. Variables such as family size, and peer influence were found to have negative influences on respondent’s decision to save. With regards to the extent of saving; the determinant factors of saving has a positive significant impact on amount of saving. The findings implied the need for designing strategies that could improve the saving behavior, mobilization and diversification of saving by daily laborer. Moreover, the need for government involvement in building the capacity of daily laborer in terms of education and information systems with regards to savings as well as encouraging financial institutions to implement door-to-door service provisions so as to enhance saving behavior of daily laborer are desirable.