“Determinants Of Saving Participation Of Daily Laborers: A Case Study Of Ambo Town

Abstract

The saving participation of daily laborer are determined by social, cultural, economic and institutional factors. This study investigated the determinants of saving participation among daily laborers in Ambo town, Ethiopia, employing a mixed-methods approach. The research combined quantitative analysis through a robust logistic regression model and qualitative insights gained from focus group discussions (FGDs) and personal observations. Both primary and secondary data sources were used to obtain the data. A total 165 respondent samples were selected through a convincing sampling method and administered and returned the survey questionnaire. The descriptive analysis results revealed that out of the 165 daily laborer respondents, 94 (56.97%) were savers, while 71 (43.03%) were non-savers. The logistic regression model explained an impressive 85.8% of the variation in saving participation, providing robust evidence on the key factors influencing the saving behavior of this population. The results revealed that family size, share of expenditure from income, training on saving and financial literacy were statistically significant predictors of saving participation. Specifically, the analysis showed that individuals from larger families, those with a lower share of expenditure from income, those who had received training on saving, and those with higher levels of financial literacy were more likely to participate in saving activities. Conversely, variables such as sex, age, marital status, educational background, religion, perception about interest rates, access to financial services, and daily income did not have a significant impact on saving behavior. The qualitative findings from the FGDs and personal observations complemented the quantitative results, providing valuable insights into the daily laborers' saving practices and the challenges they face in saving. This study provides robust evidence on the key determinants of saving participation among daily laborers in Ambo town, contributing to the growing body of research on financial inclusion and saving practices in low-income communities. The absence of any formal financial education or training further compounded their difficulties in building a saving culture. The insights gained can inform the development of evidence-based policies and programs to promote financial inclusion and enhance the financial security of this underserved population.