ADIGRAT UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

THE FACTORS THAT AFFECT HOUSEHOLDS SAVING

BEHAVIOR: A case study in Adigrat town

A senior essay submitted as a partial fulfillment for the

degree award of B.A. Degree in Accounting & Finance

By: Aemiro Girma

ID NO_ 2545/05

Advisor: Simon T. (Msc)

June.2015
Adigrat, Ethiopia
 ACKNOWLEDGMENT
First and for most I would like to say thank you to GOD to make me patient to complete this
research because without his permission cannot do anything.

Next I Would like to express my appreciation to my advisor, Simon T.(MSC) ,for his
extremely valuable and constructive comments .Without his suggestion this senior research
cannot completed on time.

Next, I would like to say thank you to my mother, brother and to my lovely relatives to
support me by financial and psychologically to reach this paper at the end.

Last but not least, I Would like to thank you Adigrat city society for their permission to
give me the necessary information pertinent to my research help which eventually made me
very familiar with the practical aspect of my research topic.

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 ABSTRACT
Saving represents one of the most predictable determinants of successful personal and Economic
development. People desire to save also although they tend to postpone saving until they have higher
paying jobs, or stability in their lives. The purpose of this study to asses saving habits and identify
factors that affect household saving in selected Kebeles in Adigrat city. Samples of 60 households are
selected in the city, particularly in selected kebele i.e. 03&04during January to June 2007 E.C. The
study also uses purposive sampling technique .The questionnaires are main research instruments that
used for data gathering. The study employed explanatory statistics to analysis the raw data.

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 TABLE OF CONTENT

Contents page
ACKNOWLEDGMENT..............................................................................................................................i
ABSTRACT..............................................................................................................................................ii
TABLE OF CONTENT..............................................................................................................................iii
LIST OF TABLE........................................................................................................................................v
ACRIMONY............................................................................................................................................vi
CHAPTER ONE........................................................................................................................................1
1. Introduction.......................................................................................................................................1
1.1 Background of study......................................................................................................................1
1.2 Statement of the problem................................................................................................................2
1.3. Objective of the study.....................................................................................................................2
1.3.1. General objective.........................................................................................................................2
1.3.2. Specific objective..........................................................................................................................2
1.4 Research Methodology....................................................................................................................3
1. 4.1 Research Design........................................................................................................................3
1.4.2 Source of Data..............................................................................................................................3
1.4.3 Data Collection Procedures...........................................................................................................3
1.4 .4 Sample Method Used...................................................................................................................3
1.4.5 Population and sample.................................................................................................................3
1.4.6 Data Analysis................................................................................................................................4
1.5 Significance of the study..................................................................................................................4
1.6 Scope of the Study...........................................................................................................................4
1.7 Organization of the study................................................................................................................4
CHAPTER-TWO.......................................................................................................................................5
2. Review of literature...........................................................................................................................5
2.1 Theoretical literature.......................................................................................................................6
2.1.1 Saving in personal finance............................................................................................................7
2.2 Empirical Literature.........................................................................................................................8
2.2.1 The Life-Cycle Hypothesis (LCH)....................................................................................................8
2.2.2 Relative income hypothesis (RIH)..................................................................................................9
2.2.3. The permanent income hypothesis............................................................................................10

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2.3 Factors that affect household saving.............................................................................................10
2.3.1 Income and Growth Variables:...................................................................................................10
2.3.2 Demographic variables...............................................................................................................11
2.3.3 Financial variables......................................................................................................................11
2.3.4 Uncertainty variables..................................................................................................................12
2.3.5 Government policy variables.......................................................................................................12
CHAPTER-THREE..................................................................................................................................15
3. Data Analysis and Interpretation.....................................................................................................15
3.1 Background of the respondents.....................................................................................................15
3.2. Demographic Characteristics:.......................................................................................................15
3.2.1. Respondents Profile...................................................................................................................16
3.3. Information related to factors that affect household saving:.......................................................17
CHAPTER FOUR....................................................................................................................................24
4. Conclusion and Recommendation....................................................................................................24
4.1 Conclusion......................................................................................................................................24
4.2 Recommendation...........................................................................................................................26
Bibiography
APPENDIX

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 LIST OF TABLE
Table Page

3.1 Respondents profile…………………………………………………………………..16

3.2 Major Source of households income…………………………………………….18

3.3 Monthly income of the household……………………………………………………19

3.4 Information related to households awareness about saving………………19

3.5 Sources of the awareness that households get……………………………………20

3.6 Information related to household saving………………………………………………20

3.7 Reasons those household do not save………………………………………………….21

3.8 Purpose of household saving……………………………………………………………….22

3.9 Information related to savings mechanism of household……………………..23

3.10 Reasons of choosing mechanism………………………………………………………..23

3.11 Major expenditure of household……………………………………………………….24

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 ACRIMONY
FDIC =Federal Deposit Insurance Corporation

GNP=Gross National Product

LCH= Life Cycle Hypothesis

PIH= Permanent Income Hypothesis

RIH=Relative Income Hypothesis

U.S= United States

MOFED=Ministry of Finance and Economic Development

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 CHAPTER ONE

1. Introduction

1.1 Background of study

Saving is among important variables for the growth of an economy for any country. In
addition, an income is doing not consumed by immediately buying goods and services. It
constitutes the bases for capital formation, investment and growth of the society (Nwachukwu
and Odigie, 2009). Even if household saving has multiple uses, it has two primary functions.
First, saving provide economic security of safety net. By transferring resources from present
to future through savings, individuals are prepaid to face un expected and irregular financial
situations. Second, saving leads to accumulation of wealth that enables individuals to improve
their living standards and to respond to new opportunities. When we come to saving people in
general and poor in particular might not be completely rational and completely knowledgeable
(Karim, 2010).

The goal of promoting saving habit is to make people more aware of financial opportunities,
choices and possible consequences. Even if the Ethiopian banking system has long-history
phenomenon, most of those people were not in a good habit of saving. Majority of
population can generate an income and led themselves, but not properly use it. Some of the
consumption habit of society particularly are relates to cultural traits expected in extravagant
expenditures during holly days and occasion and ceremonies such as wedding, funeral etc.
That has a negative contribution on saving. The act of saving influenced by several variables
like, perception of saving of those who save their assessment of its cost and benefits or the
return from saving, their age, family size and structure, objectives and motivation of saving,
environment, etc. Different perceptions save differently.

For some, saving is money reserved for future use, where as some others its surplus income
over its expenditure and for purchase of household goods and services. When saving is
perceives as money reserved for future needs it implies an international decision behind
saving, rather being residue. This decision on part of household to save for meeting future
needs depend on many factors, namely determinants of saving which include factors that
affect both ability to save and the will to save. Furthermore, this paper would examined the
factor that affect household saving in Adigrat town.

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1.2 Statement of the problem
Saving is a very important component which is responsible for meeting any emergency
accrued by the individuals or the households. Saving is more of meant for meeting
contingencies but sometimes it also acts as a form of investment. However, sometimes
peoples are not inclined towards saving and the very delicate reason is lack of awareness.
This study can be a relevant one to know the reason of dissaving and if saving occurs then
what are the determinants, which are responsible for saving. Aggregate saving in any
economy is dependent on a number of variables. In addition, most of our country’s society
have lower saving rate and declined over the time. During the period of 1960-2003 the saving
rate becomes decline from time to time. When the period of1960-1974 its saving rate is 14%,
during the Dergue its saving rate is 7%, according to this information, the a average saving
rate is 7.7%.In generally these information is given by Abu Girma, 2004E.C on MOFED.This
shows that the Ethiopian society saving habit is too low from time to time as it displayed on
the given data. This may be due to in appropriate handling or usage of resources of each
individual in the country.

Therefore, an efficient and effective use of an income and save the surplus or disposable
income by using depository financial institutions plays a vital role to develop better and
continuous saving habit for the society. Now a day, there are around 9 banks in Adigrat town
and one microfinance institution which is Dedebit Credit and Saving Institution which
facilitates household saving.

Even if, most of the individuals have an enough income, still they do not use their own
income in an appropriate and efficient way. In the study tried to identify the factors that affect
households saving in the Adigrat town.

1.3. Objective of the study

1.3.1. General objective

The overall objective of the study is to assess the factor that affect household saving in
Adigrat.

1.3.2. Specific objective

 To identify the major sources of income for the households.
 To evaluate the major factors that affect household saving.
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  To assess of saving practice and saving habit of house hold in Adigrat town.

1.4 Research Methodology

1. 4.1 Research Design

A research design should provide relevant information that would most efficiently and
address the research questions or hypothesis (Hair et al …, 2007) . As can be seen from the
research problem and objective of the study is more of explanatory type. Therefore, survey
research design is appropriate for this study.

1.4.2 Source of Data

Both primary and secondary data were used in this research paper. The primary data was
collected through questioners from the sample households. Secondary data was collected
mainly from unpublished documents such as previous papers.

1.4.3 Data Collection Procedures

In order to make an efficient and effective research study, it is important collecting a good
and reliable data for the study. This study would be used two types of data gathering
instruments. The primary data would be collected through close- ended and open- ended
questionnaires. From the secondary data also collected from un published data.

1.4 .4 Sample Method Used

In this study the purposive sampling techniques was used to obtain samples from the total
population in Adigrat town.

1.4.5 Population and sample

.
The population of the study is all kebeles in Adigrat town However; it is difficult to manage
the whole size of the population with in short period. Taking this problem in to account that
selects two kebeles which is 03 and 04 out of the whole population by using purposive
sampling techniques .The reason that the researcher would select this kebele due to time and
financial constraints to investigate all population of the town.

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 1.4.6 Data Analysis
In the research, the study describes the way in which the data would be organized, analyzed,
and interpreted. The collected data is consists large amount of raw data. Therefore, this raw
data is organized to make the finding is easy or clear for analysis and interpretation.
Therefore, the data are analyzed through explanatory analysis method i.e. percentage and
frequency.

1.5 Significance of the study

Although different studies concerning about saving would be conducted this study aimed to
shedding new light on the factor that affect saving. Therefore, the result of this finding would
have the following significant.

 The saver and financial institutions be aware of the factors why peoples do not save
 Its finding may use for financial institutions to see their potential customers and they
may design attractive means of saving services for the society.
 It would be shown an empirical evidence for the savers in relation to their saving
whether they have high level of income or not.
 It would be shown that the way to save their scares / limited income in a proper
manner.

1.6 Scope of the Study

Taking time and other limitations in consideration the study would be limited or restricted to
the selected Keble i.e. 03 and 04 in Adigrat town .The study would investigated only on the
households who are living in Adigrat town .

1.7 Organization of the study

The paper would be organizes as follow. The first chapter included introduction, statements
of the problem , significance of the study ,scope of the study ,research methodology and
organization of the paper .In chapter two , review of literature would be presented .In chapter
three data analysis and findings of the research would presented . Chapter –four contained
conclusion drawn from findings and recommendation.

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 CHAPTER-TWO

2. Review of literature
Household saving is defines as parts of current income. After payment of direct tax, that is
doing not consumed or transferred for future consumption. Saving includes current
disbursements made in the production in household liabilities such as payment of loans. In
contrast any expenditure of households not financed by current income. However, by use of
credit represents an increase in financial liabilities of individuals and it is treats as negative
saving. On the other hand, debt to GNP ratio and dependency
Adverse impact on national saving. Saving also defined as putting aside money for use
(saving=income-expenditure).This can be in the form of investment, bank deposit and
policies. Saving can further defined as that part of after tax income that is not for current
consumption (Cronji, 2010).This definition is expanded by Prinsloo(2000),by stating that
saving;
 Includes,(a)current disbursement made in reduction of household liabilities (such as
repayment of capital on loans for housing and consumer durables,(b) regular and
recurring employer and employee contribution to pension and insurance fund and
interest charged on those funds, and (c) retained income of unincorporated business
enterprise and non-profit institutions serving households; and
 Excludes (a) current household expenditures financed by credit and (b) capital gains
and losses.
According to Prinsloo (2000), saving by the household sector or personal saving is divided in
to two categories: First, contractual-saving- it involves individuals committing themselves to
a series of payment of such as premiums on insurance policies, contribution to pension funds
and capital amount payable on household mortgage loan. Second, discretionary saving-by
contrast, refers to types of saving where households are do not bound by any fixed
commitment. Contractual saving normally differs from discretionary saving to the extent that
contractual obligation is made on voluntary basis).
In addition, a household saving defined as the difference between a household’s disposable
income (mainly wages received, revenue of the self-employed and net property income) and
its consumption (expenditures on goods and services.) There are theoretical and empirical
models in literature, which explains determinants of saving and asset accumulation.

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 2.1 Theoretical literature
“The peoples of Ethiopia as a whole, and each nation’s nationality and people in Ethiopia
in particular have the right to improved living standards and to sustainable development.”
Ethiopian constitution article 43/1
“Saving is the portion of disposable income not spent on consumption of consumer goods
i.e. merchandise or other items of common or daily use; ordinarily bought by individual or
household for private consumption .but accumulated or invested directly through purchase of
securities.” business dictionary com.
Saving is income not spent, or deferred consumption. Method of saving includes putting
money aside in a bank or pension plan. Saving also includes reducing expenditure, such as
recurring cost. In terms of personal finance, saving specifies low risk preservation of money
as in a deposit account, versus investment, wherein risk is higher. There is some
disagreement about what counts as saving .for example, the part of a person’s income that is
spends on mortgage loan repayment is not spent on present consumption and is therefore
saving by the above definition, even thought people do not always think repaying a loan as
saving. However in the U.S. measurements of the numbers behind its gross national product
GNP (i.e. the national income and product account), personal interest payment are not treated
as “saving “unless the institution and people who receive them save them. “Saving” differs
from “savings ”.the former refers to an increase in one’s asset ,an increase in net
worth ,whereas the latter refers to one parts of one’s assets. Usually deposits in saving
accounts ,to all of one’s assets .saving refers to an activities occurring over time ,a flow
variable ,whereas savings refers to something that exists at any one time ,stock variable .
Saving is closely relates to investment. By not using income to buy consumer goods and
services, it is possible for resource to instead be invests by being used to produces fixed
capital, such as factories and machinery. Saving can therefore be vital to increase the amount
of fixed capital available, which contributes to economic growth. However, increased saving
does not always correspond to increased investment.
If savings that are stashed in or under a mattress or otherwise not deposited into financial
institution such as banks and other microfinance, there is no chance for those savings to be
recycled as investment by business. This means that saving may increase without increasing
investment, possibly causing shortfall of demand (pile-up of inventories, a cut –back of
production, employment, and income and thus a recession) rather than to economic growth.
In the short term, if saving falls below investment, it can lead to growth of aggregate demand
and economic boom. In the long term if saving falls to below investment it eventually

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reduces investment and detracts from future growth .future growth is made possible by
forgoing present consumption to increase investment .however savings kept in a mattress
amount to (interest –free ) loan to the government or central bank, who can recycle this loan.
In a primitive agricultural economy savings might take the form of holding back the best of
corn harvest as seed corn for the next planting season .if the whole crop were consumed the
economy would deteriorate to hunting and gathering the next season .
Interest rates; classical economics posited that interest rate would adjust to equate saving and
investment ,avoiding a pile-up of inventories (general over production).a rise on saving
would cause a fall in interest rates , stimulating investment ,hence always investment is equal
to saving. But Keynes argued that neither saving nor investment were very responsive to
interest rates (i.e. that both were interest inelastic) so that large interest rate charges were
needed .further ,it was the demand for and supplies of stocks of money that determined
interest rates in the short run. Thus, saving could exceed investment for significant amounts
of time, causing a general glut and a recession.

2.1.1 Saving in personal finance

Within personal finance, the act saving corresponds to nominal preservation of money
for future use. A deposit account paying interest is typically used to hold money future needs,
i.e, an emergency fund, to make capital purchase (car, house vacation, etc). Or to give to
someone else (children ,taxes bill,etc )within personal finance, money used to purchase
shares, put in the collective investment scheme or used to buy any asset where there is an
element of capital risk is deemed an investment. This distinction is important as the
investment risk can cause a capital loss when investments are not realizes unlike cash saving
(s). Cash savings accounts are considers having minimal risk.
In the United States, all banks are required to have deposit insurance, typically issued by
federal deposit insurance corporation (FDIC).in extreme cases; a bank failure can cause
deposit to be loss as it happened at stare of great depression. The FDIC has prevented that
from happening ever since .in many instance the terms saving and investments are used
interchangeably.
For example, many deposit accounts are labels as investment account by banks for marketing
purposes. To help establish whether an asset is saving(s) or an investment, you should ask
yourself, “Where is my money invested?” If the answer is cash then it is savings, if it is a
type of asset, which can fluctuate in nominal value, then it is investment.
(2:35 pm on 13/07/2006, @ www.wikipedia.com ).

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2.2 Empirical Literature
Under the empirical review literature, studies examine determinant in developing
countries took several ways. Some studies have concentrated mainly on fixed –effect models
to explain variations in saving performance among countries. Other studies depends on the
some robust techniques such as co-integration and integration test ,which allow for
heterogeneity in parameter and dynamics across countries, to examine the long run
determinants of saving rates. Some of these studies concentrated mainly on interaction
between demographic factors (i.e. fertility rate, dependency ratio, life expectancy) and
saving. Others examined a variety of macroeconomic variables such as income, real interest
rate, and change in terms of trade, money supply, government expenditure and openness of
economy to capture the main dominants of saving level. Under empirical review, there are
models. Among theses;

2.2.1 The Life-Cycle Hypothesis (LCH)

It is an economic theory that pertains to the spending and saving habits of people over the
course of a lifetime. The concept is developed under Franco Modigliani and his student
Richard Brumberg. The LCH presumes that individuals base consumption on a constant
percentage of their anticipated life income. An example supporting the hypothesis is that
people save for retirement while they are earning a regular income (rather than spending it all
when is earned). This simple theory leads to important and non-obvious predictions about the
economy as a whole, that national saving depends on the rate of growth of national income,
not its level, and that the level of wealth in the economy bears a simple relation to the length
of the retirement span. , the life-cycle hypothesis remains an essential part of economists’
thinking.
With population growth, there are more young people than old, more people are saving than
are dis-saving, so that the total dis-saving of the old will be less than the total saving of the
young, and there will be net positive saving. If incomes are growing, the young will be saving
on a larger scale than the old are dis-saving so that economic growth, like population growth,
causes positive saving, and the faster the growth, the higher the saving rate.
In fact, it does not much matter whether it is population growth or growth in per capita
incomes, what matters for saving is simply the rate of growth of total income. The
relationship between saving and the age-structure of the population is also a current topic of
debate. Cross-country regressions regularly find that aggregate saving rates are lower when
the population share of the elderly is high and when the population share of children is high,

8
predictions that are in accord with the life-cycle theory if saving takes place in middle age
when earnings are high, after the child-rearing ages, but prior to retirement.
C = (1/T) W (Subhahree Nayak, 2012)

2.2.2 Relative income hypothesis (RIH)

It states that the satisfaction (or utility) an individual derives from a given consumption level
depends on its relative magnitude in the society (e.g., relative to the average consumption)
rather than its absolute level. It is depends on a postulate that has long been acknowledged by
psychologists and sociologists, namely that individuals care about status. In economics, RIH
is attributed to James Duesenberry, who investigated the implications of this idea for
consumption behavior in his 1949 book titled Income, Saving and the Theory of Consumer
Behavior. At the time when Duessenberry wrote, his book the dominant theory of
consumption was the one developed by the English economist John Maynard Keynes, which
is depends on the hypothesis that individuals consume a decreasing and the pattern observed
in cross-sectional consumption data. At a given point in time, the rich in the population saved
a higher fraction of their income than the poor did. However, Keynesian theory has
contradicted by another empirical regulatory: aggregate saving rate did not grow over time as
aggregate income grew. Duessenberry argued that relative income hypothesis could account
for both the cross-sectional and time series evidence.
Duessenberry claimed that an individual’s utility index depend on the ratio of his or her
consumption to a weight average of the consumption of the others. From this, he drew two
conclusions:
(1) Aggregate saving rate is independent of aggregate income, which is consistent with the
time series evidence; and (2) the propensity to save of an individual is an increasing function
of his or her percentile position in the income distribution, which is consistent with the cross-
sectional evidence. Relative income hypothesis has also found some corroboration from
indirect macroeconomics evidence. One of these is the observation that higher growth rate
leads to higher saving rate, which is inconsistent with the life cycle/permanent- income
theory since the life time resource of an individual increases as growth rate increases. The
RIH is formulated as (Subhahree Nayak, 2012):
Ct/Yt=a-b (Yt/Y0)

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2.2.3. The permanent income hypothesis
The hypothesis implies that changes in consumption behavior are not predictable, because it
is, depends on individual expectations. This has broad implications concerning economic
policy. Under this theory, even if economic policies are successful in increasing income in
the economy, the policies may not kick off a multiplier effect from increased consumer
spending. Rather, the theory predicts there will not be an uptick in consumer spending until
workers reform expectations about their future incomes. A theory of consumer spending
which states that people would spend money at a level consistent with their expected long-
term average income. The level of expected long- term income then becomes thought as the
level of “permanent” income that is safely spent. A worker will save only if his or her current
income is higher than the anticipated level of permanent income, in order to safeguard against
future decline in income.

2.3 Factors that affect household saving

2.3.1 Income and Growth Variables:

The subsistence-consumption theories suggest that the higher per capita disposable income
leads to higher saving rate.
According to this view, a lower level of income is associated with a higher marginal
propensity to consume at the household level and implies low saving rates at the national
level. As the level of per capita income increases in an economy, the possibilities for savings
increase.
Indeed, several empirical studies indicate that countries with higher income level tend to have
higher saving rates. However, regarding the effect of income growth on saving rate, there is
no consensus in economic theory. According to life-cycle hypothesis, an increase in income
growth would increase aggregate savings through increasing the savings of people that
participate in the labor force compared to the dissavings of people who are out of the labor
force. On the other hand, according to permanent income hypothesis an increase in income
growth would lead to an increase in future and permanent income expectation and impel
consumption today. Competing theories of consumption has different expectations regarding
the impact of income growth on savings and therefore, this impact is much more an empirical
question in this regard.

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2.3.2 Demographic variables
The age distribution of the population, dependency ratio, life expectancy, labor force,
participation rate and urbanization rate are some of the variables commonly investigated in
the saving analysis. Private agents will arrange their saving patterns across different periods
of their life. Change in life expectancy would also influence the saving decisions as it may
change the relative spans of the active working and non-working periods. The higher
percentage of elder people in the population would normally decrease the saving rate as they
are not the part of active labor force that represent the part of the population that is expected
to finance their consumption out of their part of the population which are expected to dissave.
On the other hand, the higher young dependency ratio may have dual effects on the saving
and consumption behavior. It may increase the consumption of families for childcare and
force families to save for future expenses of their kids such as their education. Labor force
participation rate reflects the active part of the population and therefore is expects to increase
savings. Urbanization ratio can affect the saving behavior through the precautionary saving
behavior. Increased urbanization is expects to decrease the requirement for precautionary
savings that is more relevant in rural areas since rural population is relatively more prone to
income volatility.

2.3.3 Financial variables

One the most important financial variables relevant for saving behavior are the real interest
rate. However, it has theoretically ambiguous impact on the saving due to opposing
substitution and income effect associated with a change in the real interest rate. Firstly, an
increase in the real interest rate reduces the present value of the future income flows and
therefore has a negative impact on savings (income effect). However, at the same time it
increase the net return on savings and makes saving more attractive today. In other words, it
leads to postponement of consumption and has a positive impact in saving (substitution
effect). Therefore, the net impact of real interest rate is determines by the relative strength of
these two opposing effects and is an empirical question. The degree of development of
financial sector also has important implication for savings. The depth of financial sector,
diversity of financial instruments available for saving, and the efficiency of the financial
sectors are the important factors that is expected to have a positive impact on savings.
However, the development of the financial sector also has an expected negative impact on
savings. As the financial sector develops, the liquidity and borrowing constraints faced by
agents in the economy are relaxed. It becomes easier to use external finance in order to shift

11
resources between different periods. The immediate impact of this opportunity is to reduce
savings. The liquidity and borrowing constraints in the economy is usually measures by the
availability of credits and therefore an increase in the relative size of credits, which represents
the relaxation of the liquidity constraints, it expected to have a negative impact on savings.

2.3.4 Uncertainty variables

Uncertainty and risk about the future give rise to precautionary saving motive for risk
adverse agents. In order to safeguard against future unexpected negative income losses,
individual prefer saving today. Since the instability of income is similar to more of frequent
income losses, it reduces the saving motive. Instability in an economy may be represents
several variables including growth volatility, real exchange rate volatility, real interest rate
volatility and inflation.

2.3.5 Government policy variables

Public savings are the part of the overall savings in an economy and together with
private savings constitute national savings. Besides its direct impact on savings due to this
identity, it also affects private savings, since the public saving has direct bearings on private
disposable income. In addition to the public saving rate, details and characteristics of taxation
and other government policies are also relevant for the private savings.

Saving habit of an individual also influenced by several factors; among these:

 The more young dependents in the household, the less money would be saved
 The elderly persons in household, the money would be saved
 The more elderly persons in household, the less money would be saved
 The higher level of income, the higher the rate of saving would be.
 The higher education level, the higher the rate of saving would be.
 The more women in the work place, the higher saving rate would be.
 The higher life expectancy, the more money would be saved
 The higher inflation rate, the less would be saved
Finding those large lamp sums of money is the main management for poor peoples. How
then are these “usefully large lamp sums” to be found? The only reliable and sustainable way
open to the poor is to build them from their savings. Saving makes, the choice not to consume
cash is thus the fundamental and available first step in moment, without which financial
service cannot operate. Occasionally; of course the poor may be on the receiving end of

12
charity .They may also sell or pawn assets. However, of those method is neither reliable nor
sustainable. Charity may cause any time and asset disposals are limited to major number of
assets that the poor hold. To replace asset sold or to redeem pawned goods the poor will have
once again to turn into savings. The poor themselves recognize the need to build savings into
lump sums and contrary to popular belief, the poor want to save and try to save, and all the
poor except those who are entirely outside the cash economy can save something, no matter
how small. When poor people do not save, it is not for lack of opportunity rather than for lack
of understanding.

The predicament of poor can be expressed in the phrase “too poor to be able to save much;
too poor to do without savings”. There are several ways in which savings be built in to useful
large sum of money, but they fail into three main classes as follows.

{A} saving up: this is the most obvious way. It accumulated in some safe place until they
have shown into a useful large sum. Many poor people lack a safe and reliable opportunity to
save up. As result, they may be willing to accept a negative rate of interest on savings, in
order to be able make deposits safely. We see this in the case of the deposit collators that
work in the sums of Asia and Africa.

{B} saving down: in” saving down” the poor are lacks enough to have somebody giving them
an advance against future savings. The savings then take the form of loan repayments.

Many urban moneylenders offer this service at high cost. Microfinance institutions, like
grameen bank in Bangladesh or PRIDE in East Africa, offer similar service but do so at a
lower cost and with a greater reliability. The recipient of PRIDE or Grameen bank makes a
large number of repayments at short intervals and those repayments be sourced from the
harrower’s capacity to save. The advance therefore it sent on any of the uses in three ways.

{C} saving through: In this third case, savings made in a regular and continues basis, and a
matching lump sums made available at some point in time during this flow of saving
deposits. The services offered by insurance (in which case the savings take the form of
premium payments) are of this type, though the poor’s are rare offered by formal insurance
services, ”saving through” is also offered by many forms of savings club including, notably,
rotating savings and credit associations or ROSCAS (known in East Africa as merry-go-
rounds). “Saving through” therefore constitute as the most common class of service that the
poor are able to provide for themselves. Saving is considered as methods of diminishing the

13
resulting from inability to predict the future and additionally as an act of precaution. We
would know exactly how much money we need if we could predict the future. However, we
cannot do this, the need to save money for the future is vital. On the other hand, unexpected
events in the life cycle of individuals make saving an important element in fulfilling the
financial gap that would appear otherwise.

Considering the current trend for early retirement and its impact over the old public pension
schemes, more and more importance is that it being assign to individual saving. Beside their
usefulness in the retirement scheme, saving also comes as an alternative solution for future
investment and insurance. It offers the possibility of making divers acquisitions without the
use of loans that come with the expenses such as interest rates and future administration
costs. Over the long run, in the absence of insurance markets, saving are considered one of
the main trigger of social mobility and making future spending possibilities (George
popovici,2012-028). In general, saving is defined as money not spent. They ensure that a
person will be more independent financially and will not build so much on loans. They also
come with the opportunity of purchasing assets immediately, benefiting from a discount and
create a change to grow in the form of deposit accounts, which come with an interest rate but
we can also speak about personal saving, which includes investments (in stock, bonds, real
estate, etc) as well as deposits.

At the household level, clearly savings are regards to as the difference in wealth between
periods. However, there is still a lot of discussion on the element of wealth. A large part of
the literature concerned with savings has tended to consider only the net financial wealth
(Euwals et al, 2000; Attanasio and Rohwedder, 2003). In third studies, capital gains on real
estate or durable consumption goods such as cars, motor cycle, boats and caravans are not
taken in to consideration. These reasons for this are that not financial wealth is liquid and this
makes it more likely to influence savings. Some researchers have a different opinion (Gale,
1998; Lundberg and Ward-Batts, 2000); they consider that the value of durable goods as well
as real estate also influence savings. People usually save so they can buy later. Other
researchers considered even more different forms of saving; Nyhus and webley (2001) speak
about household liquid savings, investment savings, insurance savings, and the sum of debt
(negative savings). They have adopted this stance, evaluating the behavior of household,
asserting that different attitudes have a contrasting

14
 CHAPTER-THREE

3. Data Analysis and Interpretation

This chapter shows that the presentation of findings, analysis and interpretation of collected
data. To interpret the data, researcher is using tabular frequencies.

3.1 Background of the respondents

In collecting the necessary data, questionnaires are distributes to the household who are living
in Adigrat town, particularly in the selected kebeles i.e. 03&04. Researcher have also tried to
collect some information by interviewing the kebele administers from the selected kebeles in
order to screen out the basic information regarding the factors that affect household saving.

3.2. Demographic Characteristics:

The demographic related information includes the income, consumption and saving pattern of
the society. A number of factors affect these characteristics. The population, education,
occupation, the size of the family, income, age composition etc has a direct impact on the
saving pattern of the society or community as a whole. The importance of saving reveals that
it is important for children’s education, children’s marriage, medical expenses, social security
purpose, precaution for natural calamity like flood, drought etc. The following tables
represent the general information of 60 respondents they taken from those selected kebeles.
Table 3.1 respondents’ profile

No_ Characteristics Responses Frequency Percentage

1. Sex Male 35 58%
Female 25 41%

Total 60 100%
2. Age 18-25 13 21%
25-35 26 43%
35-50 19 31%
Above 50 2 3%
Total 60 100%
3. Education Illiterate 8 13%
Primary school 25 41%
Secondary school 18 28%
Diploma 9 15%

15
 First degree and above 1 1.5%
Total 60 100%
4. Marital status Single 12 20%
Married 24 40%
Unmarried 16 26.666%
Divorced 8 13.333%
Total 60 100%
5. Living time in Less than 5 years 20 33.333%
the kebele
5-10 years 12 20%
10-15 years 2 3.333%
15-20 years 6 10%
Above 20 years 20 33.333%
Total 60 100%

Source; own survey, 2015

3.2.1. Respondents Profile

Out of the sample households taken for the study, most of them (58.333%) are males
and the remaining 41.66% are females. The sex of household emphasizes the impact of
saving as it is shown that male population are more and support to involve themselves in
different occupational status are inclined to save more. As regarding to their age, 43.33% and
31.66% of them fall in the age group of 25-35 and 35-50 respectively.
This age group is considers as more productive or earning individuals. This is also supporting
that the aggregate saving rates are higher when the population share of the younger is higher,
predictions that are in accordance with the life-cycle theory if saving takes place in middle
age when earnings are high, after the child-rearing ages, but prior to retirement (Subhahee
Nayak, 2012). The 21.66% of them are fall in the age of 18-25. The remaining 3.33% is
found in the age above 50, which shows that the more elderly persons in household, the less
money would be saved. The higher percentage of elder people in a population would
normally decrease the saving rate as they are not part of the active labor force that represent
the part of the population that is expected to finance their consumption out of their part of the
population which are expected to dis-save.
As researcher has seen their educational level, saving also influenced. The education of the
households determines the occupation standards of the households. (15%) and (1.66%) of

16
them are diploma and first degree respectively. This implies the higher education level, the
higher the rate of saving would be. However, in our investigation, out of 60 households
(41.66%) were have an education in the primary school and (28.33%) in the secondary school
as well as (13.33%) households are illiterate. This implies that most of them have not enough
knowledge and then it have an impact on their saving habit how an income managed in the
proper way to the present as well as to the future consumptions. The marital status of those
households also determines the saving behavior of these households. Out of 60 respondents,
40% respondents are married. The married population is subject to more liabilities, which
discourage them to save more as the income of the individuals is spend on the family’s
consumption. The 26.66% are unmarried. The unmarried population save significant amount
from their income. The remaining 20% and 13.33% of the respondents are single and
divorced respectively. As it displayed above, most of these kebeles 20 (33.33%) of
individuals are residents (above 20 years) this also enable that households can generate a
constant income. The same percent is who are living in the kebele for 1-5 years. The
remaining 12 (20%), 6 (10%), and 2 (3.33%) of them are living in the kebeles from 5-10, 15-
20 and 10-15 years respectively.
Generally, from the table the study infers that saving can be influenced by different
variables such as age composition, sex education, occupation, the size of the family, income,
etc.

3.3. Information related to factors that affect household saving:

Table 3.2 major source of household’s income

NO_ Characteristics Frequency Percentage

1. Small restaurant& cafes 7 11.66%
2. Small local beverage houses 9 15%
3. Barber houses 7 11.66%
4. Small Shops 12 20%
Others (such as 25 41.66%
pool, moveable or personal
shops, bicycle maintenance
houses, etc.)
Total 60 100%

Source; own survey, 2015

17
 An income plays a major role in determining the saving behavior of the households. As
researcher can see from table above, 41.66% of the respondents mainly generate or get their
income from others items (such as pool houses, moveable shops, bicycle maintenance houses,
etc.) It implies theses households’ income generation is low and then it is not enough to save
more. The remaining 20%, 15% and 11.66% of respondents get their income from small
shops, and local small beverage houses, and small restaurant & cafes respectively. This
indicates that most of the respondents experiencing very small businesses activities that are
not enough not only to save, but also to get sufficient income, which enable to run the better
living situation. Under this condition, the households saving habit directly affected due to the
low level of income. Generally, the study conclude that households experiencing small
business activities that are not enough to save more.
Table 3.3 monthly income of the household
No_ Characteristics Frequency Percentage

1 From 100-500 9 15%

2 501-1000 23 38%

3 1001-1500 17 28%
4 1501-2000 7 11%
5 Above 2000 4 6%
Total 60 100%

Source; own survey, 2015

As researcher can see from table 3 above, 38.33% of the respondents’ generated income is
from 501-1000 and 28.33% their income 1001-1500. There has an implication that these
household experiences a very low level of income as money they generate their income from
this amount. This low income tends to household or residents have not saving habit or cannot
save more. The remaining 15%, 11.66% and 6.66% of those individuals have an income from
100-500, 1501-2000 and above 2000 respectively. Generally, the study infers that these
households have very low income.
Table 3.4 information related to households awareness about savings

Characteristics Frequency Percentage

Have an awareness 53 88%
Have no an awareness 7 11%
Total 60 100%

Source; own survey, 2015

18
 As researcher can see the table above , (88.33% ) of the respondents said that have an
awareness or know –how about saving from different source of knowledge such as from
government bodies ,skilled personnel or professionals ,credit and saving institutions, private
saving institutions, different medias and from self aware. As the respondents said that, even
if they have a knowledge regarding to saving, the major constraint is income inequality or the
income generated is varying from time to time due to small business activities experiencing.
The remaining 7 (11.66%) out 60 households have not awareness about saving. This implies
that lack of awareness about saving affects the saving habit of households. Therefore, even if
most of the people have awareness, income inequality is major influence.
Table 3.5 source of the awareness that households get

Characteristics Frequency Percentage

From government training 16 26.66%
Professionals 14 23.33%
From saving institutions 11 18.33%
Others (media, self-awareness 19 31.66%
etc).
Total 60 100%

Source; own survey, 2015

As researcher have seen from the table above, the knowledge about saving, 19(31.66%) of
them get an awareness from other items such as different medias like TV, Radio, different
magazines, newspapers and self-awareness.
The remaining 26.66%, 23.33% and 18.33% of them get an awareness from the government
that provide trainings, professionals and both government and private saving institutions
respectively.
This shows that the government and both government and private saving institutions should
give or motivations like trainings (with regarding saving rate that return to them, safety their
money ), know-how about saving how they save properly, giving rewards to those long term
customers and different incentives. Therefore, households mainly get knowledge about
saving from different sources and in small manner from government and other financial
sectors.
Table 3.6 information related to household savings

Characteristics Frequency Percentage

Save 24 40%
Do not save 36 60%

19
 Total 60 100%

Source; own survey, 2015

As researcher has seen from the table above, out of 60 households that researcher
questioned those 36(60%) of them do not save their money. Only the remaining households
are saving their monthly income, which is out of their family consumption purpose. The
question why not most of the households do not save is due to their low level of income.
Here, due to low level of income 60% of respondents do not save.

Table 3.7 reasons those households do not save

No Characteristics Frequency Percentage

_
1 Income and expense inequality 20 33.33%
2 Large number of family 8 13.33%
3 Lack of awareness about saving - -
4 Lack of personal interest to save 4 6.66%
5 Expensiveness of living standards 9 15%
6 Others - -
Total 60 100%

Source; own survey, 2015

An income has a great role in the determination of household saving behavior as well as
different un planed expenditure/expenses also affect saving.
As researcher have seen from the table above, 20(33.33%) of the respondents said that there
is no save this is the reason that there is an inequality of their monthly income and expenses
due to largely family consumptions. This imbalance income and expenses due to most of
them are in low living standard by operating those small business activities (such as small
beverage house, bicycle maintenance, pool houses, etc.), which are not enough to save rather
their income uses mostly for consumption purpose. The remaining 15%, 13.33% and 6.66%
of the respondents’ reason is that due to the expensiveness of their living standard, large
number of family size and lack of personal interest to save respectively. The large number of
family size affects saving because households spend their income for different
expenditures/expenses such as future security through unexpected cases like sudden death of
their family members, education of their children, the medical emergencies and other

20
financial crises, marriage of family members, ceremonies etc. made households inclined or
decrease to save more. Therefore, the main reason that households do not save is income and
expense inequality of an individual.
Table 3.8 purpose of household savings

Characteristics Frequency Percentage

To buy /build house 8 33.33%
For education of children 8 33.33%
To loans /debts 2 8.33%
For future living - -
Others 6 25%
(For future children’s betterment,
to give partners, etc.)
total 24 100%

Source; own survey, 2015

The data shows that 33.33% out of the 24/40% of respondents who are saving in this time
save their income for the purpose to built or buy the house as well as for their children’s
education. It implies that this individuals even if they are saving , their saving is not continue
until the saving return/ an income generated from saving would be more enough to cover all
families expenses because they have an experiencing of low income level. 25% are save
their income for different purposes like for better living condition of children for future time,
to give to the lovely partners, etc. 8.33% of households use saving for payment of loan this
also shows that they are under income level, which is not sufficient family consumption, as
well as to save farther.
It indicates also, there is no imagination of spending for future living standards as data
display they save little, consume it as soon as this is due to income fluctuation. All these
expenses have a negative effect on saving habit of the households. Here, researcher infers that
most of households save for the purpose of to buy and to build hou
Table 3.9 information related to savings mechanism of the household
Characteristics Frequency Percentage
Ikub 14 58.33%
Depository institutions 10 41.66%
By giving to elders - -
By giving to traders - -

21
 Total 24 100%

Source: own survey, 2015

As data displayed, even 14 individuals out of 24 are saving, their saving mechanism is at
Ikub, which is a traditional saving mechanism. This mechanism may affect saving because it
does not motivate saving to save more as the modern institutions rather it reduces the habit
due to backwardness of money maintenance, no interest rate, no initiatives/awards, and other
limitations. The remaining 10% are use saving institutions. This is very low in usage of
modern saving mechanism institutions this may affect saving. Most of them are not interested
or unwillingness to give their income to elders and traders this is due to their income level is
somewhat low as researcher discussed later. Therefore, Ikub is the major saving mechanism
for households.
Table 3.10 Reasons of choosing the mechanism

Characteristics Frequency Percentage

Self interest/willingness 12 50%
Interest bearing - -
Guaranties 7 29.2%
Safety 5 20.8%
Total 24 100%

Source; Own survey, 2015

As shown above the table, out of 24 savers 50% of them selected Ikub saving mechanism
because of their individual willingness. This personal perception affects household saving
because saving at banks and other depository institutions has a positive effect on saving ( it
has incentives, rewards, different trainings, etc.) other than the traditional one –Ikub.
Remaining 29.2% and 20.8% of the use this mechanism due to its guaranty and safety
respectively. There is no consideration regarding the interest return. This has an influence on
saving to save more. Therefore, half of them prefer Ikub –traditional saving mechanism that
does not initiate saving.

Table 3.11 major expenditure of the household and their spending pattern for family consumption

How much do you What are your

spent for family Characte Percentage major expenses Character percentage
consumption? r

22
 All of income 20 33.33% Food& beverage 30 50%
Half of income 24 40% Recreation 4 6.66%
¾ of income 11 18.33% Loan payment 5 8.33%
¼ of income 4 6.66% Ceremonies 12 20%
Below ¾ of income 1 1.66% Education of 9 15%
children
Total 60 100 Total 60 100%

Source; own survey, 2015

As shown in table above, 40% and 33.33% of them consume half of and all of their monthly
income respectively. This high level of income family consumption affects their saving
directly. Because of low-income bracket, high consumption habit or expenses like for food
and beverage (50%) and expenses for ceremonies (20%), households experiencing low level
of saving behavior. The expense for children’s’ education and payments for debt or loan are
also affect their income and then saving habit decline. The remaining 18.33%, 6.66% and
1.66% of them consume ¾ of income, ¼ of income and below ¾ of their income respectively.
This implies that most of individuals consume their total income, from this researcher can
observe that their saving behavior is poor because almost all of the individual use their
income for consumption purpose rather than saving for future. Researcher concludes that
households consume more than half of their income and food and beverage is the major
expense.

23
 CHAPTER FOUR

4. Conclusion and Recommendation

This chapter covers the conclusion and recommendation under two sections. The first
section presents the conclusion that describing the findings of the study in short; while the
second section is all about the recommendation. Recommendations have made from the
prospective of the findings.

4.1 Conclusion
The study on different determinants of saving behavior has shown a considerable
significance and non-significance of different variables which helped in analyzing the
determinants of the saving behavior in Adigrat town households. The different variables like
the gender, age, occupation, educational, number of family members and the marital status of
the individuals has been analyzed by showing a relationship with different determinants
affecting saving behavior like change in savings, income of the individuals, future
expectations of saving, income towards saving, wish to save each month and anytime. In the
forgoing discussion, it has been emphasizes that household saving behavior is determined by
income growth variables, demographic variables, financial variables, uncertainty and
government factors. The income and growth factors states that an income is basic
determinant of consumption or saving. The higher level of per capital disposable income
leads to higher saving rate. Financial variables also state that one of the most important
financial variables relevant for saving behavior is the real interest rate. An increase in real
interest rates reduces the present values of future income flows and therefore has a negative
impact on savings. However, at the same time it increase the net return on savings and makes
savings more attractive today. In other words, it leads to postponement of consumption and
has a positive impact on savings. Therefore, the net impact of real interest rate is determine
by the relative strength of these two opposite effects and is an empirical question.
The degree of development of the financial sector also has important implications for savings.
The depth of the financial sector, diversity of financial instruments available for savings, and
the efficiency of the financial sector are important factors that is expected to have a positive
impact on savings. As uncertainty variables also implies that Uncertainty and risks about the
future give rise to precautionary saving motives for risk-averse agents. In order to safeguard
against future unexpected income losses, individuals prefer saving today.

24
Since the instability of the economy is similar to frequent income losses, it reduces the saving
motive. Instability of economy may include growth volatility, real exchange rate volatility,
real interest rate volatility and inflation. The household saving is a base for the better standard
living of the households in the better means to maintain or protect future uncertainties and it
also a way to increase individuals’ income level. The two kebeles experiencing small
business activities (such as small restaurant and cafes, ‘Tela bet’, Berber houses, pool houses,
etc), therefore these small business activities leads to low income, low saving and low
occupational status. In the study, we attempted to analyze the saving habit and determinants
of the household saving. It found that the education status of the society is lower. If look in to
the saving pattern of these households we find that saving is accounted to be low or it is not
as such satisfied because of their low occupational status, low income and more consumption
habit such as food and beverage, for education of their children ,etc. Almost all of the
income is spends on consumption and it is insufficient to feed larger family members. Some
of the individuals are accounted to save, but although it is less and small in quantity to obtain
the needs for short period. Although the study has found there has been a significant change
in the saving habit of these society because of the increase in saving opportunities available
with a convenient situation. The increase in perception of the households for their future
security through unexpected cases like, the medical emergencies and other financial crises,
marriage of family members, ceremonies, etc made households inclined or increase to save
more.

25
4.2 Recommendation
In general, the researcher recommended the following necessary points to increase the
level of saving habit.
1. Creating an awareness to the population to save part of their income by reducing the
extravagant and cultural consumption habits during weddings, birthdays, holydays and
other ceremonies
2. It is better an efficient training about saving to those households be given by the
government that they can meet the consumption needs and some portion of the income can be
saved.
3. It is better the financial institutions increases the interest rates provided on savings, which
can motivate the households for saving in those institutions mostly in banks, saving and
credit institutions, etc rather than keeping at home.
4. It is also better an individual put a limit on extravagant consumption spending amount.
5. The government, National Bank of Ethiopia, and other concerned bodies would prepared
a free coupon and give as a gift for higher savers .This is similar to what the commercial
banks trying to do in this year.
6. Making an advertizing about importance of saving as well as where it starts from five
cents, and encouraging the household to be very core points.

26
27
 BIBLIOGRAPHY
 Callen, T.and C .Thimann (1997), Empirical Determinants of household savings:
evidence OECD countries, IMF Working paper [Electronic version], WP/97/181
 Eser Pirgan Matur, Ali Sabuncu and Sema Bahceci: Determinants of private saving
and interaction between public and private saving in Turky, 2012
 Ethiopian Economic association, vol-1 (1999/2000).Annual Report on Ethiopian
economy: Addis Ababa, Ethiopia.pp.31-50.
 Fasil Alemayehu and Merhatbeb; Birth and development of banking service in
Ethiopia, 2012
 Girma Teshome, Belay Kassa, Bezabih Emana and Jema Haji: Determinants of Rural
Household Saving in Ethiopia: Case of East Haraghe Zone Oromia regional state,
2013
 Hallaq, S (2003).Determinates of private savings: the case of Jordan (1976-
2000).journals of king Saud University, administrative science [electronic version],
15(2):83-94.
 Hlayiseka Morgan Chauke; Determinants of Household Saving: The South African
Black-middle class perspective; Pretoria University, 2011
 Husain, Aasin M. (1996), private savings and its Determinants. The cause of Pakistan
The Pakistan Development Review, [Electronic Version] 35 (1), pp.49-70
 Journal of Economics and Sustainable Development; www.iiste.org ISSN 2222-1700
(Paper) ISSN 2222-2855 (Online) Vol.4, No.3, 2013
 Kamla- Raj, (2009), informal financial institutions &poverty reduction in the
informal sector of offa town, kwara state:a case study of rotating saving and credit
association
 Kidane Badeg, Determinants of gross domestic saving in Ethiopia: a time series
analysis, 2010.
 M.L.Jhingan, (1997).Money Banking, International trade and Public Finance:
vrinda .6th
 APPENDIX
Adigrat University
College of Business and Economics
Department of Accounting and Finance
Questionnaire
Dear/ sir/madam, The following questions are prepared for research purpose to be undertake
on the title “factors that affect household saving in Adigrat town” for partial fulfillment of the
requirement for the BA degree in Adigrat university. Your genuine answer will contribute a
lot for the successful completion of study and hence you are kindly request to answer the
following questions with patience.

For better treatment of data confidentially, do not write your name on the paper.
Tank you in advance!
Part-1 Demographic information:
Please answer the following questions by putting the sign of (X) in the box provided.

1. Gender: (A) Male (B) Female

2. Age: (A) from 18 to 25 year (D) above 50

(B) From 25-35 years (C) From 35-50 years

3. Education: (A) Illiterate (D) Diploma

(B) below first level (E) First degree and above
(C) Complete secondary school

4. Marital Status: (A) single (C) unmarried

(B) Married (E) Divorced
5. How much your living time in the kebele, (specify)………..

Part -2: Questions related to factors that affect household saving.

1. What is your major source of income?

(A) Small restaurant and cafes (E) Others (Such as pool, movable
 (B) Small local beverage shops, bicycle maintenance, etc)
……
(C) Berber houses
(D) Small shops

2. Your monthly income is:

(A) From Br.100-500 (D) From Br.1501-2000
(B) From Br.501-1000 (E) Above Br. 2000
(C) From Br.1001-1500
3. Do you have awareness about save
(A) Yes (B) NO

4. If your answer in question no_3, is ‘yes’ from where you get

(A) From government training (C) from educated person
(B) From financial institution (D) others…….

5. Do you save?
(A) Yes (B) No

6. If your answer in question 5 is “yes”, what amount do you save?

(A) 100% of monthly income (C) 25% of the income
(B) 50% of the income (D) below 25% of the income
7. If you answer in question 5 is “no” what the reason you do not save?
(A) Unbalance of income and expenses (E) inflation
(B) Large number of family (F) others specify………………
(C) Lack of awareness
(D) Unwillingness to save
8. For what purpose do save
(A) To buy or construct house (B) to pay the liability
(C) To teach the children (D) to self retire
(E) Others (if any)……
9. Which mechanisms of saving do you use?
(A) Ikub (B) kasafort
(C) Saving institution (D) giving to trust traders
(E) Giving to trust elders (F) others (if any)………………

10. Why you choice this type of saving mechanism?

(A) Because of personal interest (C) Because of safety
(B) Due to interest (E) others specify…………
(D)due to accessibility of the mechanism

11. What amount you spend for family consumption purpose from your monthly income?
(A) All of monthly income (C) below ¾ of monthly income
(B) Half of monthly income (D) ¾ of monthly income
(E) ¼ of monthly in come
12. Your major expenditures are:
(A) For food and beverage (D) to teach the children
(B) For Recreations or entertainment (E) to celebrate holydays
(C) For repayment of loans (F) others (if any)………..

13. Your form of saving:

(A) In the form of livestock (D) in the form of jewelry
(B) In cash (E) others (if any)…………
(C) In the form of inventory

Thanks for your Cooperation‼!