THE DETERMINANTS OF SAVING CULTURE: A STUDY ON SAVING AND CREDIT COOPERATIVE IN DOYGANA WOREDA, KAMBATA TAMBARO ZONE, ETHIOPIA.

Abstract

Saving is the strategic variable in achieving financial security and growth affecting both individual and national wellbeing. However, saving level in Ethiopia particularly in rural areas is limited and little is known empirically about its factors. This study was initiated with the objective of identifying the determinates of saving culture used by rural households and identifying major factors affecting rural households’ savings in Doyagena woreda, Kambata Tambaro Zone, Ethiopia. primary data for the study were obtained through the use of Semi structured interview questionnaire from 217 respondents systematically selected by stratified sampling technique from four rural Keble saving and credit cooperative. In order to achieve the objectives, a study was used qualitative research approach. For the purpose of data analysis, frequency distribution, mean, standard deviation, chi-square test, t-test and Binary logit econometric model were used. Nine variables included in the study, which are gender, age,education, income, access of credit, distance, training, interest rate and financial literacy. From the Binary logit results that income, education, finical literacy, training, gender (being male), positively and significantly affects household saving. However, the study also found that other determinants of household saving like distance of the household head (Households reside in the rural area), access of credit and people in the old age negatively and significantly affects household saving while interest rate is insignificant variable. Based on these findings, the researcher recommended that emphasis should be given towards strengthening different educational opportunities (formal and non-formal education),and financial institutions should provide saving services by establishing satellite branches reasonably near to the rural households’ residences to promote rural households’ savings. Moreover, SACCOS should put strategies to diversify the income of member’s and policy interventions should center on increasing awareness to inspire members saving. Therefore, emphases have to be given in designing strategies for awareness to bring change in members’ saving culture in the study area.