Determinants of Households’ Decision to Save at Household Level: Evidence from Small holder Farmers’ of Ambo District, Oromia National Regional State, Ethiopia

Abstract

Saving is an important economic growth to be studied under the purview of the economic arena on an individual as well as household basis. In a country like Ethiopia, the income standard is almost uncertain and leads to more consumption rather than saving which has now been a central problem. The objective of this study was to identify the determinants of farmers’ decision to save at household level. Both primary and secondary data source were used for this study during 2018/19. Accordingly, the study was based on the survey of a total of 130 farmers covering three kebeles of Ambo district. Besides, binary logit model was used to analyse the factors affecting households’ decision to save. The results of this study indicated that education level of the household head, income of the household and land holding size had positively and significantly affected households’ decision to save. But distance from microfinance Institution had negatively and significantly affected households’ decision to save in the study area. This study recommends that in order to make micro-economic successful these factors and problems need to be taken into consideration by policy makers to encourage farmers to participate in saving.