Determinants of saving behavior among rural households in Tanzania: The case of Mtama District Council in Lindi Region

Anderson Gregory Rwela

doi:10.51867/ajernet.7.1.107

Authors

Anderson Gregory Rwela Departiment of Economics and Social Studies, Ardhi University, Tanzania https://orcid.org/0009-0004-2309-481X

DOI:

https://doi.org/10.51867/ajernet.7.1.107

Keywords:

Households, Mtama District Council, Lindi Region, Rural Households, Saving Behavior

Abstract

The study was conducted in the Mtama District in the Lindi Region of Southern Tanzania in May 2024, with the general aim of assessing the determinants of saving behavior among rural households. The study intended to describe the determinants of household saving behavior. The study adopted the Life-Cycle Hypothesis (LCH), which explains how people save and consume throughout their lives. A cross-sectional research design was employed to collect data, and multistage and simple random sampling was used to select study wards and villages. The target population of the respondents was rural households in three wards on which four villages were used. A sample of 150 households was drawn to collect data related to socio-economic characteristics and saving behavior through open- and closed-ended questionnaires. Descriptive and inferential statistics (binary logistic regression) were used to analyze the data collected using Statistical Package for the Social Sciences (SPSS) software version 20.0. Results revealed that some variables significantly influenced household saving behavior at 5% and 1%, respectively. Based on the study findings, the study concludes that income, education level, household size, net dependents, and sex significantly influence household saving. The study recommends that formal financial institutions should provide mass education and sensitization programs in rural areas on the services they provide and extend the services of formal institutions to rural areas to encourage the rural population to use commercial banks. This is because education is a significant factor influencing rural community saving.

Downloads

Download data is not yet available.

References

Alves, N., & Cardoso, F. (2010). Household saving in Portugal: Micro and macroeconomic evidence. Economic Bulletin (Banco de Portugal), Winter, 47-67.

Asfaw, D. M., Belete, A. A., Nigatu, A. G., & Habtie, G. M. (2023). Status and determinants of saving behavior and intensity in pastoral and agro-pastoral communities of Afar Regional State, Ethiopia. PLOS ONE, 18(2), e0281629. https://doi.org/10.1371/journal.pone.0281629 DOI: https://doi.org/10.1371/journal.pone.0281629

Borko, Z. P. (2018). Determinants of household saving: The case of Boditi Town, Wolaita Zone, Ethiopia. Open Journal of Economics and Commerce, 1(3), 11-19. https://doi.org/10.22259/2638-549X.0103003 DOI: https://doi.org/10.22259/2638-549X.0103003

Butelmann, A., & Gallego, F. (2001). Household saving in Chile (1988 and 1997): Testing the life-cycle hypothesis. Cuadernos de Economía, 38(113), 3-48. https://doi.org/10.4067/S0717-68212001011300001 DOI: https://doi.org/10.4067/S0717-68212001011300001

Chand, S. A., Kumar, R. R., & Stauvermann, P. J. (2023). Determinants of non-performing loans in a small island economy of Fiji: Accounting for COVID-19, bank-type, and globalisation. Journal of Risk and Financial Management, 16(10), 436.

https://doi.org/10.3390/jrfm16100436 DOI: https://doi.org/10.3390/jrfm16100436

Chowa, G. A., Masa, R. D., & Ansong, D. (2012). Determinants of saving among low-income individuals in rural Uganda: Evidence from AssetsAfrica. Advances in Applied Sociology, 2(4), 280-291. https://doi.org/10.4236/aasoci.2012.24037 DOI: https://doi.org/10.4236/aasoci.2012.24037

De Vos, C., Obokoh, L. O., & Abiola, B. A. (2020). Determinants of savings among non-Ricardian households in South Africa. International Journal of Social Economics, 47(11), 1329-1343. https://doi.org/10.1108/IJSE-11-2019-0692 DOI: https://doi.org/10.1108/IJSE-11-2019-0692

Feyissa, G. F., & Gebbisa, M. B. (2021). Choice and determinants of saving in rural households of Bale Zone: The case of Agarfa District, Oromia, Southeast Ethiopia. Open Access Library Journal, 8(2), 1-20. https://doi.org/10.4236/oalib.1107167 DOI: https://doi.org/10.4236/oalib.1107167

FinScope Tanzania. (2023). The state of financial inclusion and key developments: Tanzania 2023 report.

Fukuyama, F. (2001). Culture and economic development: Cultural issues. https://doi.org/10.1016/B0-08-043076-7/04584-8 DOI: https://doi.org/10.1016/B0-08-043076-7/04584-8

Habumuremyi, P. D., Habamenshi, V., & Mvunabo, G. (2019). Village savings and loan associations and socioeconomic development of poor households in Rwanda: A case of Murundi Sector (2015-2019). International Journal of Research in Economics and Social Sciences, 9(10), 67-103.

Horioka, C. Y., & Wan, J. (2007). The determinants of household saving in China: A dynamic panel analysis of provincial data. Journal of Money, Credit and Banking, 39(8), 2077-2096. https://doi.org/10.1111/j.1538-4616.2007.00099.x DOI: https://doi.org/10.1111/j.1538-4616.2007.00099.x

Kothari, C. R. (2004). Research methodology: Methods and techniques. New Age International.

Markos, W. O. (2015). Determinants and behaviour of rural household saving: A case of Dale Woreda, Sidama Zone. International Journal of Multidisciplinary Advanced Research Trends, 2, 1-9.

Martini, A., & Spataro, L. (2024). At the origins of the life cycle hypothesis of Franco Modigliani and Richard Brumberg: An attempt at analysis. The European Journal of the History of Economic Thought, 31(1), 77-110. https://doi.org/10.1080/09672567.2023.2238858 DOI: https://doi.org/10.1080/09672567.2023.2238858

Mchumi, I. M. (2017). Determinants of rural household saving in Tanzania (Doctoral dissertation, The Open University of Tanzania). http://repository.out.ac.tz/id/eprint/2129

Mideksa, F. G. (2024). Determinants of saving behavior among households in Bishoftu Town. Journal of Research in Business and Management, 11(1), 42-53.

Modigliani, F., & Cao, S. L. (2004). The Chinese saving puzzle and the life-cycle hypothesis. Journal of Economic Literature, 42(1), 145-170. https://doi.org/10.1257/.42.1.145 DOI: https://doi.org/10.1257/.42.1.145

https://doi.org/10.1257/002205104773558074 DOI: https://doi.org/10.1257/002205104773558074

National Bureau of Statistics. (2012). Population and housing census. Government of Tanzania.

Obayelu, A. E. (2012). Households' food security status and its determinants in North-Central Nigeria. Food Economics, 9(4), 241-256.

https://doi.org/10.1080/2164828X.2013.845559 DOI: https://doi.org/10.1080/2164828X.2013.845559

Omar, M. A., & Inaba, K. (2020). Does financial inclusion reduce poverty and income inequality in developing countries? A panel data analysis. Journal of Economic Structures, 9(1), 37. https://doi.org/10.1186/s40008-020-00214-4 DOI: https://doi.org/10.1186/s40008-020-00214-4

Sahudin, Z., Ridzuan, A. R., Razak, M. I. M., & Bahrudin, N. Z. (2024). Determinants of household savings. Advances in Social Sciences Research Journal, 11(2.2), 347-362. https://doi.org/10.14738/assrj.112.2.16422 DOI: https://doi.org/10.14738/assrj.112.2.16422

Sisay, K. (2023). Rural households' saving status and its determinant factors: Insights from Southwest Ethiopia. Cogent Economics & Finance, 11(2), 2275960. https://doi.org/10.1080/23322039.2023.2275960 DOI: https://doi.org/10.1080/23322039.2023.2275960

United Republic of Tanzania. (2022). Administrative units' population distribution report: National population and housing census. National Bureau of Statistics.

Wakabayashi, M., & MacKellar, F. L. (1999). Demographic trends and household saving in China (IIASA Interim Report IR-99-057). IIASA.

Yang, D. T., Zhang, J., & Zhou, S. (2012). Why are saving rates so high in China? In Capitalizing China (pp. 249-278). University of Chicago Press. https://doi.org/10.7208/chicago/9780226237268.003.0006 DOI: https://doi.org/10.7208/chicago/9780226237268.003.0006

Zwane, T., Geryling, L., & Maleka, M. (2016). The determinants of household savings in South Africa: A panel data approach. International Business and Economics Research Journal,15(4), 209-218. https://doi.org/10.19030/iber.v15i4.9758 DOI: https://doi.org/10.19030/iber.v15i4.9758