“The Determinants of Household Saving: The Case Study of Jimma Town, Ethiopia.”

Abstract

Saving is greatly contributing for economic growth at individual, communities, national and international level. Nevertheless, inappropriate management of the resources is extremely deterred the development of individual capital as well as the country, particularly the least developing country like Ethiopia, where the saving habit and system is poor. The objective of the study is to determinants of household saving means improving saving of households. The data were collected 354 households from five Kebeles, concerned offices and organization using structured questionnaire and interviews. Both descriptive and econometric analysis employed analysis to collected data. With descriptive analysis percentages, figures, graphs, charts and tables were used to present determinants of household saving and in logistic regression analyses the variables that are positively related with the probability of household saving are household head age, sex, credit and monthly income. The variables that are negatively related with the probability of household saving are family size, household education, marital status, interest rate and monthly expenditure. From nine explanatory variables, four of the variables: family size, credit access, monthly income and monthly expenditure have a significant effect on households saving. To increase the saving of households, the following recommendations should be implemented by the concerned bodies: first, income is the major determinant of saving then, due attention should be given to increase income of households. Income could be increased by implementing policies that increases the employment opportunities and reduce underemployment and concealed unemployment. Second, family planning and related measures should be taken to limit household family size. Third, to reduce expenditure, awareness should be given to households in study area. Finally, In order to save or solve problems of saving:- often compare prices before they make a purchase, consider whether the real necessity before make a purchase, always follow a careful monthly budget, high income level, to control market , to reduce inflation, to create job opportunity, properly uses addiction and other.