Please enter verification code
Confirm
Determinants of Rural Household Saving: The Case of North Shewa Zone, Amhara Regional State, Ethiopia
Journal of Investment and Management
Volume 7, Issue 5, October 2018, Pages: 151-156
Received: Oct. 19, 2018; Accepted: Nov. 7, 2018; Published: Nov. 28, 2018
Views 936      Downloads 217
Authors
Alebachew Goshim Azeref, Department of Accounting and Finance, Debre Birehan University, Debre Birehan, Ethiopia
Yohanes Tefera Gelagil, Department of Logistics and Supply Chain Management, Debre Birehan University, Debre Birehan, Ethiopia
Article Tools
Follow on us
Abstract
Long-term economic growth requires capital investment – in infrastructure, education and technology, business expansion, and so forth – and the main domestic source of funds for capital investment is saving by household. In developing countries, economic fluctuations and climate risk lead to important income variations and leave the households vulnerable to severe hardship and challenges. Moreover, their social coverage is restricted and the credit and insurance markets are not well developed and civilized. The study aims at investigating the determinants of households’ saving in north shewa zone of amhara region. Data of 150 respondents are drawn through field survey in 2017/18 by adopting multistage random sampling technique. Questions are asked directly from head of household about their education level, family size, age, amount of savings per year in birr, assets, income etc. Sample contains information about rural households. Ordinary Least Square method is used for estimation. Ordinary Least Square method analysis presents determinants of households’ saving in the zone. Based on the result it is concluded that, total dependency rate, total income of household and family size significantly raise household savings. Education of household head, sex, household landholdings, marital status, and livestock size of the households reduce saving level of households. This study also supports existence of Life cycle hypothesis. Based on the results, study suggests that Government should provide free education materials and scholarships to the students at school, college and university levels. So that household can save more rather than spending on their education. Institutions that are involved in development projects need to increase their support to improve the business environment of the rural populations. Such decisions include improvement in the Transport and communication infrastructure. Also of importance is increased involvement of the government in services that support economic activities in the rural areas such as, electricity, water, extension services and marketing channels. Future research must be conducted which takes into account nonmonetary saving of rural households.
Keywords
Determinant, Growth, Life Cycle Hypothesis, Rural Household, Saving
To cite this article
Alebachew Goshim Azeref, Yohanes Tefera Gelagil, Determinants of Rural Household Saving: The Case of North Shewa Zone, Amhara Regional State, Ethiopia, Journal of Investment and Management. Vol. 7, No. 5, 2018, pp. 151-156. doi: 10.11648/j.jim.20180705.13
Copyright
Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
References
[1]
Schmidt Hebbel, Klau, Steven B. Webb, and Gian Carlo Corsetti. (1992). Household Saving in Developing Countries, First Cross Country Evidence. The Word Bank Economic Review, Vol. 6, No. 3.
[2]
Dejene Aredo, (2003). Informal Financial Institutions: The Economic Importance of Iddir, Iqqub, and Loans, Technological Progress in Ethiopian Agriculture, Proceedings of the National Workshop on Technological Progress in Ethiopian Agriculture; November 29-30, 2001. Economics Department, Addis Ababa University, Ethiopia.
[3]
Dimova, Ralitza D. and Sen, Kunal. (2010). Is Household Income Diversification a Means of Survival or a Means of Accumulation?
[4]
Iyoha, M., Oyefusi, S., and Oriakhi, E., (2003). An introduction to modern Macroeconomics. Mindex publishing: Benin City, Nigeria.
[5]
Manyama, M. M., (2007). Instilling a Culture of Savings in South Africa. An MSc Thesis Presented at Gordon Institute of Business Science, University of Pretoria, South Africa.
[6]
Nga, M. T., (2007). An Investigative Analysis into the Saving Behavior of Poor Households in Developing Countries: With Specific Reference to South Africa. An MSc Thesis Presented to the Department of Economics, University of the Western Cape. South Africa.
[7]
Nwachukwu, T. and P. Odigie, (2009). What Drives Private Saving in Nigeria. Centre for the Study of African Economies Conference, University of Oxford.
[8]
Prinsloo, J. W., (2000). The Saving Behavior of the South African Economy. Occasional Paper No 14, South African Reserve Bank. South Africa.
[9]
R. Adeyemo and A. S. Bamire. (2005). Saving and Investment Patterns of Cooperatve Farmers in Shouthwestern Nigeria.
[10]
Rogg, C., (2006). Asset Portfolios in Africa Evidence from Rural Ethiopia. UNU-WIDER, Centre for the Study of African Economies, University of Oxford. Department for International Development (UK). Research Paper No. 2006/145.
[11]
Rutherford, S. (1999). The poor and their money. Delhi, India: Oxford University Press Saving in the Philippines. A paper submitted to USAID/Philippines OEDG.
[12]
Deaton, A. S., (2005). Franco Modigliani and the Life Cycle Theory of Consumption. Banca Nazionale del Lavoro Quarterly Review.
[13]
Solow. (1956). Saving, Investment and Economic growth.
[14]
[14] Zeller, M. and Sharma, M. (2000). Many borrow, more save and all insure: Implications for food and micro-finance policy. Food Pol, 25: 143–16.
[15]
Zhu, Q., (2004). The Impact of Rural Enterprises on Household Savings in China. ZEF – Discussion Papers on Development Policy Bonn, Germany.
ADDRESS
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
U.S.A.
Tel: (001)347-983-5186