Abstract:
Saving is considered as an important variable in the theory of economic growth determining,
both personal and national welfare. However, saving in Ethiopia in rural areas is low and little
as known empirically about its behavior and factors affecting. This study aims at investigating
the determinants and behavior of rural households’ saving in Kachabira Woreda Kembata
Tembaro Zone. Data of 123 respondents are drawn through the field survey in 2019 by adopting
multistage random sampling techniques. Question are asked directly from head of household
about their education level, household size, age, average monthly savings in birr, property,
income etc. Sample contains information concerning rural households. Tobit regression model
was used to analysis. Tobit regression shows that income, education, and use of planning for
consumption status were significant and have a positive influence on the probability of
household heads to save. However, people in the old age have a negative influence on
probability of household heads to save. This study also supports presence of Life cycle
hypothesis. Descriptive statistics percentages and frequency were also employed to designate the
forms in which household heads in a Kachabira Woreda save. The effect shows that household
heads save in either financial or non-financial forms. Financial form of saving identified
includes depositing cash with financial institutions as well as fixed deposits and keeping money
at home. The non-financial form identified includes coffee, livestock, ginger, maize and teff,
other farmland and houses. Kendall’s coefficient of concordance (W) was also used to assesshow
much agreement among household heads regarding the benefits household heads derive from
savings. Eight issues were identified as benefits that household heads in study area derive from
savings, among which buy asset, paying of school fees, meet unforeseen emergencies, improving
and upgrading homes, interest on savings, accumulation of capital for investment, pay off debt
and enjoy at retirement age were their major benefits in order of importance. The result of W
designates that there is agreement among household heads regarding the benefits household
heads derive from savings. Therefore, it is recommended that the government and other
concerned bodies could deliver training for households so as to raise their level, culture and
attitude of saving.
