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Determinants of the choice of a savings option: "The case of African Households"

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  • Asare, Eris
  • Nakakeeto, Gertrude
  • Segarra, Eduardo

Abstract

Recent research shows that about 2.5 million people have no access to financial services worldwide. The research also shows that Africa, the home to 70 percent of the world’s least developed countries, has 80 percent of its population unbanked. These statistics are particularly disturbing as they have direct implications for economic growth. This is because, financial inclusion, including savings, has been shown to have a positive impact on economic growth and development. However, recent empirical research is limited in explaining the determinants of the choice of the savings option in Africa. By using survey data obtained from the World-Global Financial Inclusion (Global Findex) Database, 2014, we investigate how household’s characteristics affect their choice of a saving option. We use the multinomial probit model due to its ability to account for issues of independence of irrelevant alternatives (IIA). Our results indicate that there is a strong disconnect between female entrepreneurs and the formal banking sector.

Suggested Citation

  • Asare, Eris & Nakakeeto, Gertrude & Segarra, Eduardo, 2018. "Determinants of the choice of a savings option: "The case of African Households"," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266868, Southern Agricultural Economics Association.
  • Handle: RePEc:ags:saea18:266868
    DOI: 10.22004/ag.econ.266868
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    File URL: https://ageconsearch.umn.edu/record/266868/files/Determinants%20of%20the%20choice%20of%20a%20savings%20option%20SAEA%20Paper.pdf
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    References listed on IDEAS

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    1. Emilio Sacerdoti, 2005. "Access to Bank Credit in Sub-Saharan Africa; Key Issues and Reform Strategies," IMF Working Papers 05/166, International Monetary Fund.
    2. Vivien Foster & Cecilia Briceno-Garmendia, 2010. "Africa's Infrastructure : A Time for Transformation [Infrastructures africaines]," World Bank Publications, The World Bank, number 2692, June.
    3. Bruhn, Miriam & Love, Inessa, 2009. "The economic impact of banking the unbanked : evidence from Mexico," Policy Research Working Paper Series 4981, The World Bank.
    4. Thorsten Beck & Samuel Munzele Maimbo & Issa Faye & Thouraya Triki, 2011. "Financing Africa : Through the Crisis and Beyond," World Bank Publications, The World Bank, number 2355, June.
    Full references (including those not matched with items on IDEAS)

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    Keywords

    Agricultural Finance;

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