Determinants of Household Saving Behavior: The Case of Selected Towns in West Hararghe Zone, Oromia National Regional State, Ethiopia

Determinants of Household Saving Behavior

Abstract

The way in which a society develops its saving habit affects capital accumulation and, consequently, a nation's economic growth. Household saving in Ethiopia is very low, and this low level of saving restricts a country's rate of economic growth. The aim of this study was to investigate the determinants of household saving behavior in selected towns of West Hararghe Zone, Ethiopia. The study used cross-sectional data gathered from 395 randomly chosen sample households residing in West Hararghe Zone self-administered towns. Result of the tobit model showed that age of household head, family size, dependency ratio, educational level of household head, monthly household income, and form of institutions used for saving were significant determinants of household saving behavior. The study has emphasized the importance of awareness creation relating with saving, household income improvement, family size reduction, and enhancement on educational level of household heads to shape the behavior of household’s towards saving.