Topic ; Factors Affecting Saving habits of households in
Ethiopia.
Introduction
Saving refers to the fraction of income not instantly consumed but kept for future investment,
consumption or for unforeseen contingencies in the future. It is important in improving the well-being of
individuals and serve as a security at the times of shocks for the households. Saving is being seen as a
method of diminishing the risk resulting from the inability to predict the future and thus acting as
precaution. Saving may take form of bank deposit and holding on hand. This personal saving
has two primary functions. First ,saving provides the economic security of a safety net.
Second saving leads to accumulation of wealth that enables individual to improve their
living standard and to respond opportunities. The sum of savings individual household is
the national savings.The total national saving measured by excess of national income over
consumption and expenditure of the government.The main domestic source of funds for
capital investment is household saving. Development economics recognized for several
decades the importance of mobilization of domestic savings for economic growth in
developing country. serious problem confronting poor country including Ethiopia is saving
and investment gap. Because of this gap, these countries faced challenges to finance
investment needed for growth from domestic saving.saving is a way to smooth income and
to face shocks. Hence better understanding of household saving behavior is important.
1. STATEMENT OF THE PROBLEM.
National saving is important for the economic development of the country. Because,
investment is generated through saving. Country that having higher saving rate enjoy the
higher growth rate and high employment and output. Saving is an indicator of economic
development where it is used to achieve economic growth in any developing country. Most
of developing countries have lower rate of saving habits. Improving saving habit of an
individual is given attention to look a variety of saving services used by people or customer
in country. Improving dependence not only an attending of government provider, but also
appropriate execution of recommended component of saving such as; household in
community and institution or sectors. So that the following important issues is identifie.
1. Saving habits and institutions of saving area have become increasingly important for
safety of the employees.
2. Investigation of factors associated with saving habits assumes critical importance.
3. Provision of saving services varies widely across individuals in Ethiopia.
4.Understanding this variation at the individual and in the community level order to
successfully implement any saving related policies and programs.