Abstract
A high savings culture is a foundation of a sustainable national social, sound financial and economic policy. Themain objective of this paper was to gain insights on savings behaviour by individuals in Zimbabwe after theadoption of the multiple currency exchange rate system. A micro econometric approach which took into accountof individual heterogeneity was adopted. The selected individual characteristics inputted in the logit model assavings predictors were age, marital status, religion, education, position in the household, household size, type ofaccommodation, place of accommodation, employment status, income, number of people employed in thehousehold, and expenditure per month. The goal was to understand which variables authorities and commercialbanks might need to target in order to promote a savings culture in Zimbabwe after most people lost their savingsin the banks due to hyperinflation. Secondly, we investigated within a sample of savers what determined thenumber of times individuals would deposit money in the bank by use of Poisson regression model. Finally, wecame up with a savings predicting model which helps banks identify targeted customers based on the individualcharacteristics. The results revealed that majority of the variables were significant as predictors to savings.However, income level proved to be the most significant variable as it had the least probability value. Topromote a saving culture, banks in Zimbabwe may need to consider bringing in differentiated and tailor madeproducts for the high net worth and the mass market.
Highlights
The government of Zimbabwe deliberately allowed the use of a multiple currency exchange rate system (MPC), which was adopted on 30 January 2009
We investigated within a sample of savers what determined the number of times individuals would deposit money in the bank by use of Poisson regression model
We investigated within a sample of savers what determined the number of times that an individual deposit money in the bank by use of Poisson regression model
Summary
The government of Zimbabwe deliberately allowed the use of a multiple currency exchange rate system (MPC), which was adopted on 30 January 2009. The multiple currency system allows trade to be completed using major trading currencies, for example, the United States Dollar, Pound Sterling, South African Rand, and the Botswana Pula. It took a lot of effort to attract deposits back into the system in Zimbabwe due to loss aversion phobia after most people lost their savings in the banks due to hyperinflation. Given this background, it is important to understand how a savings culture can be promoted in Zimbabwe. It is important to understand fundamentals that determine savings
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