Analysis of Saving Patterns by Rural Households in Guduru Districts of Oromia National Regional State, Ethiopia

Agassa Gadassa

doi:10.7176/jesd/10-3-04

Abstract

Background : Saving level in Ethiopia is very low and little is known empirically about its patterns and determinants. Therefore, this study is aimed at analysis of saving pattern of rural households in Guduru districts. Methods : Primary data were collected from the two districts.196 respondents from Guduru districts using multistage sampling techniques. Results : The study showed that 35.20, 34.69 and 30.10 % of Guduru sample household saves in kind, in cash and both in kind and in cash respectively. Multinomial regression model revealed that social and religious expenditures, distance to market, and distance to financial institutions had negative and significant effect on cash saving of household while dependency ratio had negative and significant effect on both in kind and in cash saving also information access and age of household head had positive effect. Conclusion : The pattern of the nature of saving is an important factor in determining whether the saved amount is utilized for productive purpose or not. This study indicated that rural households’ areas mainly use physical forms of saving. However, this saving in physical form in study areas was not assessed by formal financial system of the country. Therefore, the study recommends physical saving of household’s should be accessed and encouraged to expand gross domestic saving of the country. Keywords : Household’s Saving, Saving Pattern, Guduru District, Multinomial Logistic Regression, Oromia, Ethiopia. DOI : 10.7176/JESD/10-3-04

Highlights

Saving level in Ethiopia is very low and little is known empirically about its patterns and determinants
Access to information (INFO): This was found to have positive and highly significant at 1% level of significance to influence on decision to use in cash saving (Table 1)
Given all variables kept constant, the likelihood of the household choice of in cash saving relative to the base category decrease by 2.8% when the distance between household residence home and saving institution increases by one kilometer (Table 1)

Summary

Introduction

Saving level in Ethiopia is very low and little is known empirically about its patterns and determinants. This study is aimed at analysis of saving pattern of rural households in Guduru districts. Results: The study showed that 35.20, 34.69 and 30.10 % of Guduru sample household saves in kind, in cash and both in kind and in cash respectively. This study indicated that rural households’ areas mainly use physical forms of saving. This saving in physical form in study areas was not assessed by formal financial system of the country. The study recommends physical saving of household’s should be accessed and encouraged to expand gross domestic saving of the country.

Objectives

Methods

Results