FACTORS AFFECTING RURAL HOUSEHOLD SAVING: IN TAKUSSA DISTRICT, CENTERAL GONDAR ZONE, ETHIOPIA

Abstract

Saving is considered as an important factor in the theory of economic growth that determines both individual and national wellbeing. However, saving in rural areas is very low and little as known empirically about its patterns and factors affecting. The study was aimed to identify household perception towards saving, forms of saving used by rural households and analyzing the major factors affecting on rural households’ savings. For the purpose of the study across-sectional data were collected from 153 sampled households and both primary and secondary data were used. Primary data were collected from rural households using interview schedule and FGD from respondents’ selected using simple random sampling method. The data were analyzed using descriptive statistics (frequency, mean and standard deviation); inferential statistics (Chi-square and t-test) and binary logit econometric model. The study showed that 58.2% of the sampled households had savings in formal and informal financial institutions whereas 41.8% of the sampled households had no saving practice during the study period. Out of the total savers about 65.2% of the sampled households have savings in formal financial institutions. Inferentially, eleven variables namely, age of the household, sex of the household, marital status, educational level of the household, family size, annual income, annual expenditure on social/religious ceremonies, off/non farm income, land size, livestock size and access to credit were found to have significant correlation on rural households’ saving. From the Binary logit results, seven variables namely, age, annual income, land size and livestock size in TLU were found positive significant effect on rural household saving and the male households head, family size and expenditure on social/religious ceremonies were found negatively significant effect on rural households’ savings. Based on these findings, the researcher recommended that governments should give attention to their improving income of rural households by using diversifying agricultural system should be mandatory for their income generation improvement in order to enhance rural household saving practice.