Assessing household confidence in saving with banks and MNO-led mobile money: evidence from the household survey in Tanzania

Even though the role of saving in building financial inclusion and people’s welfare in developing countries is widely acknowledged, limited attention has been given to understanding households' confidence in saving with formal institutions. This study addressed this gap by assessing household confidence in saving with banks and MNO-led mobile money (MNO-MM) services in Tanzania, focusing on understanding whether saving confidence in these options is influenced and differs by the level of education and location of households. Using Finscope survey data from 9,915, the Agresti-Caffo and Binomial test results showed that households are more confident in saving with banks than with MNOs. Additionally, the binary logistic regression results showed that their likelihood of expressing confidence in saving at both banks and MNOs was significantly affected by their level of education and location. By applying the social learning institutional theory and the technology adoption model, this study demonstrated how the financial institutional setup and technology-based platforms influenced confidence in saving. It recommends promoting institutions that encourage saving and facilitating the adoption of technology that enables the integration of banking and mobile money services.Over 50 percent of Tanzanians use informal money saving options such as saving at home, saving with a community or buying valuable things, mainly because of limited household exposure and awareness of the formal saving mechanisms. Given that informal saving options are not secure and convenient, this study contributes to an understanding of ways of enhancing financial inclusion by revealing the factors that influence households’ confidence in saving with banks and money network operators (MNOs). It shows the significance of education and location in determining the saving confidence and enhancing financial inclusion. It also emphasises the need to increase efforts in integrating mobile money saving with banking services to attract more people to formal saving options and encourage them to increase their savings. The study inform policymakers and financial institutions on ways of developing more user-friendly saving mechanisms in both urban and rural areas including branch networks, e-banking, and e-wallet platforms. Accordingly, the study contributes to efforts geared to mobilizing savings for improved welfare of households.