Abstract
Saving is the fraction of income not instantly consumed but kept for future investment, consumption or for unforeseen contingencies in the future. The aim of this study was to investigate the saving behavior of household and determinants of saving in the district using primary data from 249 samples of household. The analysis used descriptive and inferential analysis to achieve the objective the study. The descriptive part showed that about 14.5% of the household were not saving in financial institutions whereas about 85.5% saved in financial institution. The chi-square test of association revealed that Age of household head, education level of household head, main occupation, knowing about the interest rate of financial institution, having farm land, getting advice about saving were significantly associated the saving status of households. Additionally, the logistic regression showed that age of household, main occupations, knowing about interest rates, income of households and family size were significant determinants of households saving status. In order to enhance the households saving status in financial institutions, the district, the Oromia regional state and the government financial sectors should work on awareness creation about saving and increase the income of the household. Keywords: Financial institution; Logistic regression; Saving Status DOI : 10.7176/RJFA/10-23-03 Publication date: December 31 st 2019
Highlights
Saving is the fraction of income not immediately consumed but kept for future investment, consumption or for unforeseen incidents
Saving behavior of the households The following figure1 showed that most of the respondents (85.5%) saved their money in financial institution while about 14.5% of them not saved their money in financial institutions
At 5% level of significance, the chi-square test of association showed that the variable age, education level of Household head, main occupation, having farm land, getting advice to save and preference of institution were significantly associated with saving status where gender, marital status, religion and kebeles were not significant
Summary
Saving is the fraction of income not immediately consumed but kept for future investment, consumption or for unforeseen incidents. It used in improving the well-being of individuals and serve as a security at the times of shocks for the households. In developing countries savings are important factors of households’ well-being. Saving enable households to maintain a stable life time level of living and it is likely to refrain from current consumption to save for payment for children’s education (Yao et al, 2011). Unexpected events in the life-cycle of individuals make saving an important element in fulfilling the financial gap (Popovici 2012)
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