ANALYSIS OF HOUSEHOLD SAVING IN DILLA TOWN OF GEDEO ZONE, SNNP, ETHIOPIA

Abstract

Domestic savings in Ethiopia are subject by household savings that are not sufficiently routed into productive use and also there is a saving and investment gap. The objective of the study was to identify the determinants of the household saving behavior in Dilla Town of southern Ethiopia. It employed descriptive statistics and double hurdle model to analyze the data collected from a sample of 120 households in the study area. Primary data collected using a random sampling method employing self-administered using structured questionnaires. The descriptive result showed that about 45% percent of sampled households involved in saving of which 75% percent use formal financial institutions and the remaining use for alternative saving options. The overall saving performance of the household is poor. The findings revealed that there is positive and significant causal relationship between amount of saving and income, personal saving habit, level of education, additional income generating activity and home owner of the respondents. Variables such as family size, age, and expenditure and dependency ratio were found to have negative influences on respondent’s decision to save. The findings implied the need for designing strategies that could improve the saving behavior, mobilization and diversification of saving by household. Furthermore, the need for government and other concerned organs involvement in building the capacity and incentives that in terms of households increasing saving behavior; by reduce rate of inflation and improve deposit interest rate and increasing service quality, crating awareness of the society that discouraging bad culture or norm and encourage household saving.