Determinants of Households Saving: The Case of Shashamene Town, West Arsi Zone, Oromia, Ethiopia

Barke Dekeba Balcha¹, Genemo Fitala Feyissa¹ and Dereje Mathewos Jekamo^1,

¹Department of Economics College of Business and Economics, Madda Walabu University, Bale-Robe, Ethiopia

Cite this paper:
Barke Dekeba Balcha, Genemo Fitala Feyissa and Dereje Mathewos Jekamo. Determinants of Households Saving: The Case of Shashamene Town, West Arsi Zone, Oromia, Ethiopia. Journal of Finance and Economics. 2022; 10(1):20-28. doi: 10.12691/jfe-10-1-4

Abstract

The study was conducted to identify factors affecting household savings in Shashamene town. Primary data were collected using questionnaires, and secondary data sources were also collected from written documents and journal articles. The study used a random sampling technique so that each household would have an equal chance of being selected. To collect primary data, a questionnaire and a total of 381 respondents were included in the survey. To attain the objectives of the study, the researcher employed a descriptive method and logit regression model to analyse the determinants of household savings. Thirteen explanatory variables were included in the model’s equation. The results of logit regression indicated that seven variables were statistically significant. Sex of the household head, age of the household head, marital status, family size, household tenure, household annual expenditure and access to credit were among the significant factors affecting household savings. From these significant variables: household head sex, age, Marital status and access to credit positively affected household savings, while the remaining variables negatively affected household savings. Two-sample t-tests and chi-squared tests were employed to compare saver and non-saver patients. Hence, efforts should be made to increase the real income of households through well-paying and better job creation by the establishment of micro- and small-scale enterprises, with the increased provision of economic and social infrastructure. Thus, stakeholder interventions to tackle the determinant factors are important measures to be undertaken.

Keywords:
Binary Logit Model Household Saving Shashamene town Ethiopia

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