| Abstract: | Savings has long been seen as a key component of growth that helps underdeveloped
nations move toward development. Saving also vital component of household welfare in
emerging nations besides, the objective of the study was to identify the determinants of the
household saving behavior in Kolefekeraniyo Sub City, Addis Ababa, Ethiopia”. Both
primary and secondary sources were used, Primary data gathered by self-administered,
structured questionnaires using a sample random sampling technique. It employed
descriptive statistics and double hurdle model to analyze the data collected from a sample
156 of households in the study area. The descriptive result showed that about 45% percent
of sampled households involved in saving of which 75% percent use formal financial
institutions and the remaining use for alternative saving options. 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
owner of the respondents. Variables such as family size, age, and expenditure and
dependency ratio were found to have negative influences on respondent’s decision to save.
The findings implied the need for designing strategies that could improve the saving
behavior, mobilization and diversification of saving by household. Furthermore, the
government and other concerned bodies must become involved in creating the capacity
and incentives for households to increase their saving behavior. These incentives can be
achieved by lowering the rate of inflation, improving deposit interest rates, and improving
service quality. They can also raise public awareness of the need to discourage negative
cultural norms and discourage bad habits in order to promote household saving |
