Determinants of saving in rural household: the case of bako district, west shewa, Ethiopia

Abstract

Saving is the most fundamentaleconomic variable to be investigated within an economy on an individual and also household basis. Saving is the act of reducing present consumption for future consumption. And it is important to maintain and expand an economy’s capital structure and in turn lays foundation for long run economic growth. The study was concerned on determinants of rural household saving in case of Bako district, West Shewa, Ethiopia.The study applied multistage sampling technique to conduct the study. So, out of 28 rural kebeles found in Bako district four kebele’s were selected randomly.There are 8600 household heads in these Kebeles, from these 147 rural household heads were randomly selected as the representative of rural xv household in the study area. Tocarry out the study; descriptive statistics such as mean, standard deviation, and percentage and econometric modelOrdinary Least Square method were applied through Stata Software version 13. From the regression results age, family size, land size, income, number of livestock, tax and expenditure on annual festival are explanatory variables which are significantly determining rural household saving. In this case age, income and number of livestock are statistically significant at one percent; whereas, family size, land size, tax and expenditure on annual festival are statistically significant at five percent.So, give training for the rural households on family planning to reduce the family size, providing modern agricultural inputs at low cost, give training for rural households how they are rearing and fattening only certain livestock and obtain high income, encourage the rural households to engage in non-farm activities in order to enhance their income, and aware the rural households to reduce high expenditure on annual festival are the policy implication provided to enhance the household saving in rural areas.