Abstract

Equb is a form of traditional cooperative or traditional self-help group in Ethiopia. Equb is a financial form of traditional cooperative formed voluntarily. It is a rotating saving and credit type association whose members make regular contributions to a revolving loan fund. This research study is aimed at examining factors affecting household participation on Equb, conducted on three major towns of Wolaita Zone i.e. Sodo, Boditi and Areka towns. The sample size is determined by using Taro Yemane’s simplified formula from the total household of 61499, sample size of 283. A causal cross sectional survey was conducted among all the household participants. The primary data was collected through structured questionnaire and selected by using systematic random sampling among households dwelling in Areka, Boditi and Sodo town. The data was analyzed by using STATA and both descriptive and inferential statistics were used. The multiple linear regression model was employed with household participation in Equb as the dependent variable. Th findings of the study shown that factors such as income, economic, social and psychological is significantly affecting the saving habit of urban households. In this case it is recommended that financial institutions, government and other stakeholders should support and work on awareness creation for those sectors. Keywords: Equb, Household, Participants, Savings, traditional cooperatives DOI : 10.7176/JPID/48-01

Highlights

  • 1.1 Background of the Study Business exploitation, expansion and modernization depend on capital investment, given good management

  • Regressions were run for the household participation on Equb (HPOE) as continuous variable

  • With the coefficient of income factor0.324, keeping other factors remain constant as income factor of household increases by one percent, we expect household participation on Equb to increase by 32 percent

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Summary

Introduction

1.1 Background of the Study Business exploitation, expansion and modernization depend on capital investment, given good management. Government intervention in the form of ownership of banks, regulation and subsidization of credit has failed to allocate credit to poor borrowers (Udry, 1994). Institutional problems such as the lending conditions which limit access of investors to credit facilities have not been adequately addressed (Vargese, 2005). Informal financial institutions such as Rotating Savings and Credit Associations (ROSCAs) and their participants have received growing attention over the last two decades. A recent study on urban Ethiopia provided detailed evidence of the important role of informal finance in consumption smoothing of households (Alvi and Dendir, 2009). Once the preserve of anthropologists and sociologists, is capturing the attention of economists

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