Determinants of Urban Household Savings Behavior: The case of Ambo Town, Oromia National Regional State

Abstract

This study is conducted under the title “Determinants of Urban Household Saving Behavior in Ambo Town, Ethiopia.” Its main objective was to empirically investigate the saving practices and determinants of urban household saving behavior in Ambo town, Ethiopia. Cross-sectional primary data was collected using self-administered open-ended and closed-ended questionnaires from 150 households in two kebeles of Ambo town. Selection of the sample was done by two stage stratified sampling techniques, where the first stage units were kebels and the second stage units were households. Descriptive statistics and a binary logistic regression model were used to test the formulated hypotheses. The study found that Age of households, education level of households, inflation rate, total household income, and saving experience had a positive and significant impact on household saving. The governing saving motive found in this study was a precautionary motive. The study recommended that the government, in collaboration with financial institutions, should promote household saving by introducing different packages of prize-linked promotional savings; the government should continue and spend the utmost effort to stabilize inflationary pressures using short-term and long-term strategies; and the government should strive to increase the disposable income of households. This study focused on household savings using only financial savings and employed a smaller sample and a binary logit regression model.