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Explaining the Saving Behavior of Households¡¯ in Ethiopia, Africa

Author

Listed:
  • Eric Asare
  • Eduardo Segarra
  • Nakakeeto Gertrude
  • Fafanyo Asiseh

Abstract

Savings have been shown to have a positive impact on economic growth at the macroeconomic level. But, the micro-level analysis of households¡¯ savings behavior is limited, especially in Sub-Saharan African economies. This study contributes to the understanding of the savings behavior of households in Africa, by modeling the savings behavior of households¡¯ in Ethiopia with the two-part model. The results of the study reveal that number of extension contacts and access to market information have significant positive effects on the likelihood that a household would save. Moreover, land holdings (bad production season last year) have significant positive (adverse) impact on the expected amount of money a household would save. Based on the results of this study, policies are recommended to increase savings in Ethiopia.

Suggested Citation

  • Eric Asare & Eduardo Segarra & Nakakeeto Gertrude & Fafanyo Asiseh, 2018. "Explaining the Saving Behavior of Households¡¯ in Ethiopia, Africa," Applied Economics and Finance, Redfame publishing, vol. 5(2), pages 143-151, March.
  • Handle: RePEc:rfa:aefjnl:v:5:y:2018:i:2:p:143-151
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    References listed on IDEAS

    as
    1. Emmanuel Anoruo & Yusuf Ahmad, 2001. "Causal Relationship between Domestic Savings and Economic Growth: Evidence from Seven African Countries," African Development Review, African Development Bank, vol. 13(2), pages 238-249.
    2. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, September.
    3. Mohsin Hasnain Ahmad & Zeshan Atiq & Shaista Alam & Muhammad S. Butt, 2006. "The impact of demography, growth and public policy on household saving: a case study of Pakistan," Asia-Pacific Development Journal, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), vol. 13(2), pages 57-71, December.
    4. Leff, Nathaniel H, 1969. "Dependency Rates and Savings Rates," American Economic Review, American Economic Association, vol. 59(5), pages 886-896, December.
    5. Federico Belotti & Partha Deb & Willard G. Manning & Edward C. Norton, 2015. "twopm: Two-part models," Stata Journal, StataCorp LP, vol. 15(1), pages 3-20, March.
    6. Hubbard, R Glenn & Skinner, Jonathan & Zeldes, Stephen P, 1994. "Expanding the Life-Cycle Model: Precautionary Saving and Public Policy," American Economic Review, American Economic Association, vol. 84(2), pages 174-179, May.
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    More about this item

    Keywords

    households' savings; Africa; economic growth; Ethiopia; two-part model;

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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