Analysis of Correlates of Saving Habit at Household Level in Jimma Zone, Ethiopia

Habtamu Mossie


This study focused on identifying the correlates of the complex saving habit at the household level in Jimma Zone, Mana district. Saving decisions of a proportion of personal income are varied and depends on different socio-economic parameters that are associated with someone’s motive to use his/her income. In fact, developing countries experienced low income and saving rate and perpetuate in the poverty traps and vicious circle of poverty. Along with low saving rate and the existing resource gaps to invest in developing countries, the demand for more foreign assistance like FDI is enormous.  However, merely through this, it could be difficult to overcome problems of low saving rate unless it is coupled with improvement in saving motives of households. As such, in Ethiopia little effort has been done to improve saving habit of their people. To address this identified gap, this study focused on assessing saving habits and identifying factors that inhibit saving habits of rural communities in Jimma zone, Manna districts. The study was employed multi-stage sampling and used 100 households. The study was also augmented both primary and secondary data obtained from various sources. Both descriptive and inferential methods of data analysis of statistical techniques such as, mean, percentage, chi square and t-test and Econometrics model, Tobit model were applied. From the survey result 68(68%) of them currently save whereas the remaining 32(32%) of them not saved at all from their personal income during the course of this study. The major factors that affect annual saving rate was their expenditure and farm input price with negatively influence saving capacity and whereas Educational level, average annual income, the existence of other source of income (on and off farm) engaged with other types of work (occupation) had positive impact on saving habit. To this end, both government and non-government organization should give due attention to the rural households and support different income diversification strategies and established well devised institutional settings to get rid of potential problems in the area and need to support and improve the livelihood of the people so as to boost domestic saving and geared towards to investment.

Keywords: Saving Habit, Foreign saving, Domestic saving, personal Income, Investment, Small and Micro financial Institution, Economic Growth & Development


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