DETERMINANTS OF DAILY LABORERS‟ SAVING BEHAVIOR IN URBAN AREA OF ETHIOPIA: THE CASE OF WOLISO TOWN, SOUTH WEST SHOA ZONE, OROMIA REGIONAL STATE, ETHIOPIA

Abstract

In Ethiopia saving rate is low and the saving culture is not well developed. Moreover, there is huge resource gap indicating the dependency of the country on external resources to finance the gap over the years. Although numerous researchers have studied on the determinants of personal saving behavior among the households, no study have been conducted on the daily laborers. Hence, this study was aimed to examine the determinants of the saving behavior of the daily laborers in Woliso town. The study was used both primary and secondary data. The primary data was collected from 288 samples registered daily laborers in Woliso town by using stratified sampling method. Questionnaire and interview were used as a method of data collections. To test the consistency of the data Cronbach’s alpha test was used. Descriptive statistics and inferential methods of data analysis were employed. For Econometric Analysis Logistic Regression Model was used. The descriptive results shows that out of sampled respondents 93(32.3%) have saving practice and 195(67.7%) have no saving practice. The study found that out of saver respondents, 28(9.7%) was motivated to save to meet emergency and 0.7% motivated to obtain loan. The logit model results indicated that, monthly income, plan to save, training and financial literacy were positively and significantly affect the daily laborers saving behavior where as sex, distance to the nearest financial institutions, peer influence and marital status were significantly and negatively affects. Therefore, the study recommended that the government and concerned bodies should give capacity building training on saving awareness, create alternative income generating activities, and mobilizing so as to use formal financial institutions.