THE IMPACT OF MICRO FINANCEs ON HOUSEHOLD’s SAVING; THE CASE OF AMHARA CREDIT AND SAVING INSTITUTION IN NORTH WOLLO ZONE,ETHIOPIA

Abstract

In Ethiopia, among other things, the low level of domestic saving, which is reflected in the large resource gap is one of the fundamental problems hampering production, productivity, and income of the people. Since impact of institutional saving is very limited, the majority of rural poor households are forced to search financial services through informal channels and holding in-kind savings as their alternatives. Amhara Credit and Saving Institution (ACSI) is one of the largest microfinance institutions operating in Ethiopia established in accordance with the issuing proclamation No.40/1996 (the microfinance law). Its microfinance market is the low-income population of Ethiopia, particularly of the Amhara Region. The study sought to examine the impact of microfinance (ACSI) on household saving in meket district. A multistage sampling procedure was developed to select

3 sample kebeles and 372 sampled rural households. A structured and semi-structured questionnaire was developed to collect quantitative and qualitative data from sampled households’. In addition; econometric model, for instance, logit and PSM model were used for analyzing the data collected. It was observed that there was a change of amount of cash savings, year number of years of saving and in income earned from off& none farm income-generating activities (IGA) respectively. that participation in ACSI MFI household saving mobilization has a positive impact on the amount of cash saving, saving habit and income earned from off & nonfarm IGAS but in kind saving aspects of household in terms of their livestock asset has been affected negatively in the study area. Because low interest rate (7%) charged were gained for their deposit cashes and forced saving principles of ACSI decreased to save participants in kind and (time value of money) the current market value of money hinders participants to save in kind (inflated to purchase livestock assets after accumulation of savings) their means of saving embedded with amounts of cash other than saving in kind were affected the participant households in asset creation and stabilization.