DETERMINANTS OF HOUSEHOLD SAVING IN ASELLA TOWN OF OROMIA REGION, ETHIOPIA

Abstract

Saving is an important factor in households’ welfare in developing countries. However, most studies have focused on urban areas and at the macroeconomic level. Domestic savings in Ethiopia are subject by Household savings that are not sufficiently routed into productive use and also there is a saving and investment gap. The objective of the study was to identify the determinants of the household saving behaviour in Asella Town Oromia, Ethiopia. It employed descriptive statistics and double hurdle model to analyse the data collected from a sample of 380 households in the study area. Primary data collected using a random sampling method employing self-administered using structured questionnaires. The descriptive result Showed that about 52% of sampled household not involved in saving. About 48% of sampled households involved in saving. The overall saving performance of the household is poor. The findings revealed that there is positive and significant causal relationship between amount of saving and income, personal saving habit, level of education, additional income generating activity and home ownership are statistically significant at 5% level have positive influences on respondent’s decision to save.. Variables such as family size, expenditure & age were statistically significant at 5% level and found to have negative influences on respondent’s decision to save. Numbers of dependent statistically significant at 1% level has negative influences on respondent’s decision to save. The findings implied the need for designing strategies that could improve the saving behaviour, mobilization and diversification of saving by household. Furthermore, the need for government and other concerned organs involvement in building the capacity and incentives that in terms of households increasing saving behaviour; based on the findings the study offers some recommendation for the intervention to improve households saving these includes promoting family planning and education to reduce family size, encouraging income generating activity for dependants increase financial education for households, empowering women through credit access and leadership development, promoting personal saving and building affordable housing in short term and designing long term polices related to housing program additionally, awareness creation and training on expenditure should be provided to the society to promote better consumption budgeting.