SENIOR RESEARCH REPORT ON FACTORS AFFECTING THE CULTURE OF SAVING HABIT IN WOLKITE TOWN

Abstract

This study examines the factors influencing the culture of saving habits among households in Wolkite Town, Ethiopia. Saving is a critical component of economic development, yet many households in developing countries, including Ethiopia, struggle to cultivate robust saving behaviors. The research employs a mixed-methods approach, combining descriptive and econometric analyses, to identify the socio-economic and demographic determinants of saving habits. Primary data were collected from 98 households using a structured questionnaire, and multiple linear regression was used to analyze the data. The findings reveal that from 9 independent variables four variables which are financial literacy, income level, marital status, and expenditure patterns significantly influence saving behaviors. Financial literacy emerged as a strong positive predictor of saving, with higher levels of financial knowledge associated with increased savings. Income level also had a significant positive impact, highlighting the importance of income-generating opportunities in fostering saving habits. Conversely, higher expenditure patterns were negatively correlated with savings, indicating that consumption behaviors limit disposable income available for saving. The study concludes that targeted interventions, such as financial literacy programs, income enhancement initiatives, and tailored saving products, are essential to promote a culture of saving in Wolkite Town. Policymakers and financial institutions are encouraged to design strategies that address the identified barriers and leverage the positive determinants to improve household saving behaviors.