COLLEGE OF BUSINESS AND ECONOMICS DEPARTMENT ECONOMICS DETERMINANTS OF HOUSEHOLD SAVING BEHAVIOR: A CASE STUDY IN NEKEMTE CITY

Abstract

The main objective of the study was to assess the determinants of households saving behavior in Nekemte city. The model incorporated demographic, socioeconomic, and economic variables, including sex of household head, age, family size, marital status, household education level, household income, employment status, household expenditure and household access to credit, saving status and household training. The regression results reveal that household education level, household saving status, and households training are statistically significant predictors of saving behavior. These findings highlight the importance of financial literacy, behavioral reinforcement, and institutional support in shaping household financial decisions. The findings of the study show that out of eleven explanatory variables; five of them namely age, family size, household expenditure, household employment status, and household training are the most influential determinants of saving behavior in the study area. Since traditional demographic and income-related variables were not statistically significant, interventions should focus less on income redistribution and more on institutional support. Linking training programs with local financial institutions can create sustainable saving practices. Policy implications include expanding financial literacy programs, encouraging early saving habits, and strengthening advisory services to foster a culture of saving and enhance household financial resilience.

Key words: Determinants of household, household saving behavior, binary logistic model