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Determinants and Barriers of Saving Habits among NVSU Tricycle
Operator and Drivers’ Association (TODA) members
Daus, Regine, Hermosura, Francheska, Ladoc, Normelee, Perez, Jeff,
and Vaquilar, Jian Carlo
College of Business Education, Nueva Vizcaya State University
Thesis
in Partial Fulfillment of the Requirements for the Degree
Bachelor of Science in Business Administration: Major in Financial
Management
June 2024
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Abstract
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Chapter I
Introduction
Background of the Study
Saving habits are the regular practice of putting aside a portion of one's income
or resources in order to meet future financial goals. Saving is an important part of
personal finance and financial well-being because it allows people to save for
emergencies, pay for large expenses like a home or education, and ultimately achieve
long-term financial stability and security. Consistent and disciplined saving habits can
lead to significant financial benefits over time, including compound interest, reduced
debt, and increased financial freedom and flexibility.
The Tricycle Operator Drivers Association (TODA) plays an important role in
the transportation industry in many communities around the world. Due to their low
income and lack of access to formal financial services, low-income earners like
members of the Tricycle Operators and Drivers Association (TODA) should place a
special emphasis on developing good saving habits. Research reveals, however, that
low-wage earners frequently struggle with saving and encounter a number of obstacles
to financial inclusion.
According to a World Bank study, low-income people frequently lack access to
financial services and have limited financial literacy, which can have a negative impact
on their saving habits and financial behavior (World Bank, 2014). Given that members
of tricycle operator and drivers associations are typically from low-income households,
understanding their saving habits and financial behavior is critical for developing
appropriate interventions. According to a study conducted in Nigeria, tricycle operators
faced numerous financial challenges, including high operational costs and low income,
making it difficult for them to save and invest (Ogunleye et al., 2019).
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Understanding the unique financial challenges that tricycle operators face can
help guide the development of tailored financial education programs and policies to
promote responsible financial behavior. Numerous TODA members work in the
informal sector, which is frequently characterized by low productivity, low wages, and
subpar working conditions (ILO, 2018). Additionally, they are more susceptible to
economic shocks and financial instability because they lack formal contracts and social
protection. In order to create appropriate policies and interventions to advance financial
inclusion and wellbeing, it is necessary to comprehend the saving habits and financial
difficulties experienced by TODA members.
A group of people who drive tricycles, also known as "trikes," which are a
typical mode of public transportation in many parts of the world, especially in
developing nations, make up the tricycle operator and drivers association. Due to the
unpredictable nature of their jobs and the high cost of vehicle maintenance, these
operators and drivers frequently earn low to moderate incomes and may encounter
serious financial difficulties. To gain a deeper understanding of tricycle operators' and
drivers' associations' financial behaviors and to pinpoint potential saving tactics that
could aid in their increased financial security.
Odiaka, C. E., & Oparah, J. C. (2019) concludes that tricycle operators in Imo
State, Nigeria, have a relatively low savings culture due to factors such as low income,
limited financial education, and lack of access to financial services. The study
recommends that financial institutions provide more affordable and accessible financial
services to this group to enhance their savings culture and financial inclusion. Asante,
S. K., & Osei-Assibey, E. (2019) concludes that income level, access to financial
services, and level of education are significant determinants of saving behavior among
tricycle operators in the Kumasi Metropolis, Ghana. The study suggests that
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policymakers should prioritize financial education and increase access to financial
services to improve the savings behavior of tricycle operators in the region.
Some studies concluded that lot of researches has been conducted in this area
of interest, however there is still a gap that needs to be filled. As a result, Alhassan, Y.
A., & Iddrisu, A. (2019). The results showed that factors such as income level, level of
education, and awareness of financial services positively affect savings behavior. On
the other hand, the study found that expenses such as health and family need negatively
affect savings behavior. A study by Buehren et al. (2019) found that financial
constraints, such as lack of access to credit and savings, limited financial literacy, and
low income, are significant barriers to saving among women in rural areas in Africa. A
study by Molla et al. (2020) found that saving behavior is influenced by cultural norms
and values, such as the importance of providing for family members and saving for
emergencies, as well as external factors such as economic instability and political
uncertainty.
According to earlier studies on personal finance and saving behavior, people
who can save consistently tend to have better financial outcomes over the long run,
such as greater financial security, improved credit scores, and higher levels of overall
wealth. Insights into the financial behaviors of a particular population can be gained
from evaluating the saving practices of the tricycle operators and drivers’ association.
This information can then be used to guide policy and programmatic interventions
aimed at promoting financial inclusion and stability for this group. The literature and
conclusions from the scholars lacked about the information on variety of factors, such
as income level, education, and cultural attitudes toward money, can have an impact on
a person's capacity to save. Most of the studies focus on saving habits of students and
there are less researches about saving habits of low-income earners. This study will
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therefore focus on the determinants and barriers on saving habits of NVSU TODA
members.
This study aims to examine the saving practices of TODA members and identify
the factors and obstacles that limit their capacity to save. The study is relevant because
TODA members play a large role in the informal economy of many developing nations,
offering accessible and reasonably priced transportation services to both urban and rural
areas. Due to their erratic income, lack of social security, and restricted access to
financial services, TODA members frequently experience financial insecurity despite
their contribution to the economy. This study will concentrate on figuring out what
factors, such as income level, financial literacy, family size, and educational attainment,
determine the saving behaviors of TODA members. The study will also look at the
obstacles that TODA members face when trying to save money, such as high costs, a
lack of financial literacy, and restricted access to financial services. The research's
findings will add to the body of knowledge on low-income earners' savings habits,
particularly in the informal economy. The research's ultimate goal is to offer
understandings that can help TODA members and their families become more
financially secure.
Objectives of the Study
This study seeks to achieve its general objectives in Determinants and Barriers
of Saving Habits Among NVSU Tricycle Operator and Drivers Association (TODA)
Members by focusing on the following specific objectives:
1.
To determine the profile of the respondents such as demographic profile and
socio-economic profile.
2.
To determine the internal factors of saving behavior among TODA members,
including financial knowledge and personal factors.
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3.
To determine the of external factors, such as access to financial services,
economic conditions, and social norms, on saving behavior among TODA members.
4.
To determine the current level of saving habits among TODA members,
including their savings frequency, amount saved, and reasons for saving.
5.
To identify the major barriers to saving among TODA members, including
financial constraints, lack of financial literacy, and limited income.
Research Questions
The purpose of this study is to know the Determinants and Barriers of Saving
Habits Among NVSU Tricycle Operator and Drivers Association (TODA) Members.
Specifically, the study sought to answer the following questions:
1.
What is the profile of the respondents such as demographic profile and socio-
economic profile.
2.
What are the internal factors of saving behavior among TODA members,
including financial knowledge and personal factors.
3.
What are the external factors, such as access to financial services, economic
conditions, and social norms, on the saving behavior of TODA members?
4.
What is the level of saving habits among TODA members in terms of their
savings frequency, amount saved, and reasons for saving?
5.
What are the major barriers to saving among TODA members, and how do these
barriers vary by demographic and external factors?
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Significance of the Study
The significance of the study on determinants and barriers of saving habits
among Tricycle Operator and Drivers Association (TODA) members lies to the
following:
TODA Associations and Members: TODA associations and their members
will directly benefit from the study. Associations can improve their programs and
initiatives to better support the financial security of their members by being aware of
the factors that influence and hinder saving behavior. They can become more
financially strong, stable, and economically independent by developing better saving
habits.
Students: The study can be a useful tool for students, especially those studying
community development, economics, finance, or the social sciences. Students are able
to understand the difficulties and difficulties of financial inclusion thanks to the
practical insights it offers into the saving practices of a particular group within the
informal sector. The study may encourage students to investigate related areas of study
or to think about careers in financial inclusion, social impact, or community
development.
Teachers: The study's findings can be used in lectures and discussions in the
classroom. The study can be used as a case study by educators to highlight the value of
financial literacy, economic empowerment, and the contribution of saving habits to the
improvement of those with limited opportunities. Teachers can aid students in
developing a deeper understanding of the difficulties faced by TODA members.
Community: The TODA community and the larger community in which they
operate will directly benefit from the study. The research can support community
development initiatives and programs aimed at enhancing financial inclusion and
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empowerment by explaining the determinants and barriers of saving habits. The
research findings can guide community-based efforts to improve financial literacy,
form savings groups or cooperatives, and promote long-term saving behaviors. The
study may ultimately result in increased community quality of life and economic
stability.
Future Researchers: The study can act as a starting point for further
investigations. It provides an opportunity to start for researchers looking to explore
related subjects or add to the body of knowledge. The results of this study can be used
as a foundation for future research to carry out more thorough investigations, look at
the long-term effects of interventions, or investigate different aspects of financial
inclusion and saving practices in the informal sector.
Scope and Limitations
The study on determinants and barriers of saving habits among Tricycle
Operator and Drivers Association (TODA) members focuses on determining the
internal and external factors that influence saving habits within the TODA members of
Nueva Vizcaya State University in Region 2 Philippines. It aims to determine the
demographic factor, socio-economic factors, access to financial services, cultural
influences, and external economic conditions that impact the saving behaviors of
TODA members. It will be further validated through checklist and rating type
instruments.
This study will comprise the members of NVSU TODA. The respondents of the
study will be randomly selected. The amount and quality of data may limit the study's
ability to analyze it. The comprehensiveness, reliability, or accuracy of the data may be
limited depending on the sources used. Access to TODA members' financial
information or historical saving data may be restricted, which could have an impact on
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the accuracy and completeness of the analysis. Memory biases or personal
interpretations may affect participants' recall and accuracy of their saving behaviors.
Participants might have a hard time remembering the specifics of prior financial
transactions or might give responses that are acceptable to their social circle. These
biases may introduce errors or inaccuracies into the data, which will have an effect on
how accurate the study's conclusions are. Despite these limitations, the study
contributes valuable insights into the determinants and barriers of saving habits among
TODA members, informing policy decisions and guiding future research in the field of
financial inclusion and informal sector development.
Conceptual/Theoretical Framework of the Study
The aim of this study is to investigate the determinants that influence and serve
as obstacles to saving behavior among TODA (Tricycle Operators and Drivers
Association) members. Tricycle drivers and operators are essential to the transportation
industry, especially in rural and urban areas of many nations. Nevertheless, many
TODA members experience financial instability and lack of savings despite earning a
daily wage. This study aims to advance knowledge of financial behavior and well-being
among TODA members by investigating the variables influencing their saving habits
and the obstacles they face.
Saving money has many advantages, including acting as a safety net for
unexpected expenses and emergencies, promoting financial stability by avoiding debt
and meeting obligations, assisting people in achieving their financial goals, such as
retirement or homeownership, opening up opportunities for investments and potential
wealth growth, promoting financial independence and peace of mind, and giving people
the flexibility and ability to take advantage of opportunities. People can improve their
financial well-being and overall quality of life by developing the habit of saving
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Figure 1. Conceptual Framework
Input:
INTERNAL FACTORS
Socioeconomic Factors:
 Age, Income levels, Education,
Family size, cost of living, economic
stability, and financial constraints.
Financial Knowledge:
 Financial literacy, understanding of
saving strategies and investment
options.
Personal Factors:
 Self-control, financial goals,
motivations, and risk perceptions.
Input:
EXTERNAL FACTORS
Social Factors:
 Peer influence, family support, and
cultural norms.
Access to Financial Services:
 Availability and accessibility of
banking services, savings accounts,
and investment opportunities.
Government Policies and Support:
 Financial education programs,
matching savings programs, and
incentives.
Input:
BARRIERS
 Limited Income
 Financial Constraints
 Lack of Financial Literacy
 High Cost of Living
 Lack of Access to Financial Services
 Lack of Saving Incentives or Support










Process:
Data collection of
TODA members
profiles
Administering
questionnaires
Organization of TODA
members responses
Statistical analysis of
data
Output:
Saving Habits
Regular Savings: Positive
determinants and enabling
factors lead to regular
savings and the
accumulation of funds over
time.
Irregular or Inconsistent
Savings: Barriers and
negative determinants
result in irregular or
inconsistent saving habits.
Financial Stability: Positive
saving habits contribute to
financial stability and the
ability to meet unexpected
expenses or emergencies
Financial Independence:
Effective saving habits
promote financial
independence and reduce
reliance on external
financial support.
Improved Financial Wellbeing: Positive saving
habits contribute to
improved overall financial
well-being and a sense of
security.
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The paradigm is the graphic representation of the problem. As indicated in the
figure the determinants and barriers of saving habits among NVSU TODA members
will be greatly affected by the different internal and external factors and there are also
barriers that may affect their ability to save.
Input: The input consists of the relevant factors and variables that are considered
influential in understanding saving habits among TODA members. In this case, the
inputs include internal factors such as their socioeconomic factors, financial knowledge
and personal factors. While, the external factors include social factors, access to
financial services, government policies and support and other environmental factors.
The barriers such as limited income, financial constraints, lack of financial literacy,
high cost of living, irregular income, lack of access to financial services, cultural and
peer pressure, and the absence of saving incentives or support.
Process: The process refers to the steps or activities that occur based on the
inputs to determine the relationship between the determinants/barriers and the saving
habits of TODA members. The process involves studying and analyzing the impact of
these inputs on the saving habits, examining the interactions and relationships between
variables, and identifying patterns or trends. The researchers will collect data through
surveys to assess the impact of limited income, financial literacy, or cultural pressure
on the saving habits of TODA members. Statistical analyses or quantitative data will
be used to determine the relationships and connections between the inputs and saving
habits.
Output: The output represents the outcomes or results that are obtained from the
process of studying the determinants and barriers of saving habits. In this case, the
output would be the findings and conclusions regarding the relationship between the
identified inputs and the saving habits of TODA members. The output includes insights
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such as identifying which barriers have the most significant impact on saving habits,
understanding the specific challenges faced by TODA members, recognizing patterns
or correlations between determinants and saving behaviors, and potentially proposing
strategies or interventions to address the identified barriers and promote positive saving
habits.
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OPERATIONAL TERMS
Barriers: Obstacles or challenges that hinder the development or
implementation of desired actions or behaviors.
Determinants: Factors or variables that influence or contribute to a particular
outcome or behavior.
External Factors: Factors that originate from outside the individual or group
being studied and have an impact on their behavior or outcomes.
Family Size: The number of individuals comprising a household unit, typically
including both adults and children.
Financial Constraints: Limitations or restrictions on financial resources that
restrict an individual or household's ability to meet their financial needs or goals.
Financial Literacy: The knowledge and understanding of financial concepts,
products, and strategies.
Household: A group of people living together and sharing common living
arrangements, expenses, and resources.
Income: The amount of money earned or received by an individual or
household over a specific period.
Internal Factors: Factors that originate from within the individual or group
being studied and have an impact on their behavior or outcomes.
Savings: The act of setting aside money or resources for future use or as a form
of financial security.
Saving Habits: Regular patterns or behaviors related to saving money or
allocating resources towards long-term financial goals.
Socio-economic factors: The social and economic conditions that influence
individuals and communities.
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TODA: Tricycle Operator and Drivers Association, referring to a group or
association of individuals involved in operating or driving tricycles, a common form of
public transportation.
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Chapter II
Review of Related Literature
Introduction
This chapter highlights some related literature and studies that are relevant to
understanding the different aspects of research.
The literature review begins by exploring the determinants of saving habits
among TODA members. It investigates the socio-economic factors that influence their
saving behaviors, such as income levels, education, and household characteristics. The
review examines the barriers that TODA members face in establishing and maintaining
saving habits. It explores the cultural and social factors that may influence their
attitudes towards savings, such as informal support networks or traditional beliefs about
money management. The review also investigates external barriers, such as economic
instability, limited access to formal financial institutions, and the absence of suitable
savings products tailored to the unique needs of TODA members.
What is TODA?
In the Philippines, tricycles are the second most common mode of
transportation. According to statistics from the year 2022, there were 7.81 million
tricycles that were registered in the country. Since these vehicles have been around for
a while, it would be impossible to outlaw them. A tricycle, also referred to as a "trike,"
is a three-wheeled public utility vehicle made up of a motorcycle and an additional
sidecar for the passenger. A side car is on the right, and the motorcycle is to the left.
These trikes can be observed all around the nation, excluding on major or large
highways. Members of TODA play a significant role in the informal economy,
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especially in developing nations where they give local communities access to affordable
transportation services. Promoting financial inclusion and improving their economic
well-being depend on an understanding of the factors that affect their saving habits and
the difficulties they encounter in creating a culture of saving.
What is saving habits and its importance?
Saving habits refer to the regular practice of setting aside a portion of income
or resources for future use or emergencies. Extensive research has explored the concept
of saving habits, shedding light on the determinants, dynamics, and implications of
individuals' saving behaviors. According to Virani (2012) saving is scarifying the
current consumption in order to increase the living standard and fulfilling the daily
requirements in future. Saving is the act of reserving a certain amount of time or money
that you don't have to spend or utilize. Making savings a habit can improve the lifestyle
of people especially those low- and middle-income earners.
Understanding saving behaviors has major implications for people on their own,
for households, and for society as a whole. Healthy saving practices can support longterm goals, provide financial security for individuals and households, and enable future
investments. Savings habits can aid people in navigating the economy, coping with
unforeseen costs, and gradually accumulating wealth. A population with strong saving
habits can help improve the economy, reduce the need for debt, and promote overall
financial wellbeing on a larger scale.
The consistent act of saving some money or resources rather than immediately
spending them is referred to as having saving habits. Numerous studies from various
academic disciplines have emphasized the significance of good saving practices. The
influence of saving practices on decisions about the labor supply and overall economic
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productivity has been highlighted in economic studies (Chetty et al., 2014). The impact
of habits on saving behavior and its effects on long-term financial outcomes have been
studied in psychological research (Thaler & Shefrin, 1981; Ouellette & Wood, 1998).
According to sociological studies (Barr & Sarma, 2009; Modigliani & Brumberg,
1954), social and psychological factors that affect saving behaviors and their
implications for policy and pension reform. Financial studies have emphasized the
significance of saving practices for stock ownership, retirement outcomes, and wealth
accumulation (Brown et al., 2017; Haliassos & Bertaut, 1995).
A study by Thaler and Benartzi (2004) highlighted the importance of behavioral
economics in promoting saving habits. a behavioral intervention that helps individuals
overcome present bias and increase their saving rates. The study demonstrated that by
offering individuals the opportunity to commit to future increases in their savings rates,
saving habits can be positively influenced. In their research on low- and moderateincome households, Hanna and Lindamood (2010) identified several determinants of
saving behavior. They found that factors such as income, employment status, education,
and financial attitudes significantly impact individuals' saving habits.
Reasons for savings
People must learn to save money first and then spend it, claims Poole (2018). It
shows the significance of retirement savings. Life-cycle theory has been extensively
used to examine older people's savings and retirement behavior. Savings also have
different uses for other people, it can be for emergency funds, financial stability, to
achieve financial goal and financial independence.
Retirement Planning- Saving for retirement is essential to ensuring your
financial security in your later years. You can benefit from compound interest and
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investment growth over time by making contributions to retirement accounts like
401(k)s or IRAs. Given that many Americans have insufficient retirement savings, a
report from the Economic Policy Institute emphasizes the significance of saving for
retirement (Economic Policy Institute, 2021).
Emergency Fund- Saving money enables you to accumulate an emergency fund,
which acts as a safety net in case of unforeseen events like job loss, medical problems,
or house repairs. Nearly 40% of Americans, according to a Federal Reserve assessment,
would find it difficult to pay a $400 unforeseen bill (Board of Governors of the Federal
Reserve System, 2020). Such unforeseen disasters can be lessened by having an
emergency fund.
Financial Stability- Saving money lowers one's chance of going into debt and
offers financial stability. You won't need to use credit cards or loans for routine or
unforeseen expenses if you have funds. According to a study by the Urban Institute,
households with low liquid resources were more likely to struggle to make ends meet
and were more likely to be in unstable financial situations.
Financial Goal- Saving money gives you the ability to work toward your
financial objectives, such as home ownership, business startup, or financing further
education. You can amass the money you need to fulfill these goals by routinely placing
money aside. According to a Fidelity Investments poll, those who have clear financial
goals are more likely to successfully save money (Fidelity Investments, 2021).
Financial Independence: Saving money allows you to gain financial
independence and have more control over your life choices. It provides a sense of
freedom and flexibility, allowing you to pursue opportunities, change careers, or take
time off work without financial constraints. A study published in the Journal of
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Economic Psychology found that saving money was positively associated with
subjective well-being and life satisfaction (Larson & Lench, 2019).
Effects and Influence of Saving habits to Low Income Earners
Savings practices have a significant impact on one's financial well-being.
According to a 2017 study by Shobeiri and Selamat, people who consistently save
money have more financial security and are better equipped to deal with emergencies
and unforeseen costs. Savings practices give people a financial cushion that lessens
their reliance on debt and outside funding sources, which reduces financial stress and
enhances general wellbeing (Hurst et al., 2014). Additionally, consistent savings help
people achieve their long-term goals, such as retirement planning, homeownership, and
obtaining a college education (Chen & Volpe, 1998). Savings habits help people
develop good financial habits like budgeting, tracking expenses, and prioritizing
financial goals, all of which help with overall financial stability and better financial
management skills (Lyons et al., 2006).
Additionally, saving practices have wider societal and economic repercussions.
Savings are a major factor in capital formation and investment, both of which are
essential for economic stability and growth (Modigliani, 1986). Higher savings rates
are positively correlated with economic growth and stability at the individual and
governmental levels, according to studies (World Bank, 2019). Regular saving also
promotes greater financial independence for individuals and lessens the demand on
public resources because it lessens people's reliance on social safety nets and
government assistance (Friedline et al., 2015). Additionally, creating a culture of fiscal
responsibility and resilience within families and passing it down to younger generations
improves the overall financial well-being of society (Beverly & Sherraden, 1999).
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In a 2009 study, McKernan, Ratcliffe, and Vinopal looked at how saving habits
affect low-income households' financial stability. According to the research, lowincome earners who regularly saved money were more prepared to deal with financial
setbacks and unforeseen expenses. They were able to meet their basic needs thanks to
their savings, avoid expensive borrowing, and experience less financial strain. The
study emphasized the significance of saving practices in protecting low-income people
from hardship and enhancing their financial security. Furthermore, Lim and Lee (2018)
looked at how saving behaviors affect personal financial satisfaction. The results
showed that people who regularly saved money experienced higher levels of financial
satisfaction, which included feeling in control of their finances, less financial stress,
and an overall higher quality of life. Savings practices have been shown to improve
quality of life and financial well-being.
Internal factors
Determinants that Affect Savings
The perception of saving among savers, as well as their ability, willingness, and
goals or motivations for saving, all have a significant impact on saving behavior. The
households' deliberate choice to save money in order to cover future expenses depends
on a number of variables. The variables that affect one's capacity, motivation, and
opportunity to save are all included in the list of variables that are typically thought of
as saving determinants.
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Demographic and Socio-Economic Factors
Gender
In their analysis of household savings in the Transition using data from
Bulgaria, Hungary, and Poland, Denizer et al. (2000) found that households headed by
women in these three nations have significantly higher savings rates than those of men.
The research by Fisher (2010) also revealed that while the proportion of the
male and female samples reporting to save regularly was comparable, women were less
likely than men to have saved over the previous year. The literature has repeatedly
demonstrated that men and women have different risk tolerances, and that this
difference has an impact on how women behave and make financial decisions. The
findings indicate that risk tolerance influences both men and women's savings behavior.
However, some researchers have come to the conclusion that there are no
differences between men and women when it comes to saving and investing. For
instance, a 1995 study by Zhong and Xiao found no difference in stock dollar holdings
by gender. DeVaney and Su (1997) came to the same conclusion that men and women
had similar knowledge of retirement planning, and Masters and Meier (1988) found no
gender differences in the propensity of male and female entrepreneurs to take risks.
Anang et al. (2015) found that women saved more money than men in a related
study on Ghana. The study also found a negative association between age and saving
and a positive relationship between marital status and saving behavior.
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Age
Age is a significant factor because financial obligations and needs evolve over
time. Younger people might make less money and have fewer financial commitments,
whereas older people might have to worry about retirement planning and medical costs.
Saving rates were higher for households with heads aged 41–50, 51–60, and 61
or older than for those with heads aged 30–49. However, their findings showed that
whether the head of the household is retired or not does not appear to affect savings.
One might argue that households with retired heads have different saving habits than
those with non-retired heads. The consumption lifecycle theory is refuted by this
evidence. According to the lifecycle theory, households should begin spending less as
they get older.
According to the study, older people have a tendency to have more established
saving habits because they are more aware of the value of long-term financial planning.
Higher income levels were positively correlated with better saving practices because
people with more disposable income could set aside more of it for savings.
Family size
The size of the family can have an impact on financial stability because larger
families may have more debt and expenses. Socioeconomic factors influence how welloff someone is financially by affecting their capacity to work, save, and invest wisely
(Hilgert, Hogarth, & Beverly, 2003). Family size, however, was noted as a potential
obstacle to saving because it was harder for larger families to consistently save because
they frequently had higher expenses and financial obligations (Cao, 2016). According
to Kanjanapon's (2004) study, a person's family size and dependents have an impact on
his savings because they determine how much money he will need to spend.
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The findings of Elfindri (1990) and Browning and Lusardi (1996) differ because
Browning and Lusardi expanded their study to include composition while Elfindri
focused on household size in general. Therefore, a household with a majority of
working members will have a positive impact on savings, whereas a household with a
majority of dependent members will have a negative impact on savings. But when
considering the size of the household as a whole, savings are probably not positively
correlated.
Income
The amount of money available for saving, investing, and covering daily
expenses depends on income level.
There is a positive correlation between income and savings that has been found
in numerous studies around the world using various methodologies. Several academics
have developed theories in light of the findings. In Kenya, it was discovered that
household income was a statistically significant predictor of savings among rural
farmers, business owners, and teachers (Kibet et al., 2009). Similar findings were made
in Uganda where, among households reporting owning bank deposit accounts, higher
permanent and transitory incomes significantly increased the level of net deposits
(Kiiza & Pederson, 2001).
The relationship between income and savings is complicated and varies between
nations. While some studies have found that savings cause income growth, others have
found that income growth causes savings. The claim that domestic savings determine
domestic investment supports the causal relationship between saving and economic
growth. According to this line of reasoning, a high national saving rate is a key factor
in determining economic growth (Athukorala and Sen., 2004).
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Similar findings were found in a study conducted by Nayak (2013) in the
Sundergarh district of Odisha, India, which showed that the majority of rural
households had low levels of education, which had a negative impact on savings. The
study also showed that households were encouraged to save in financial institutions
with the hope of boosting their savings with additional income.
In a related study on Zimbabwe, Chikoko et al. (2013) used the logit model to
demonstrate how factors like gender, age, marital status, and educational attainment
lower the likelihood that households will save money. In fact, the paradox of thrift is
confirmed by the fact that young adult households tend to be more active than their
older counterparts and thus save more. The study also found that household heads are
more likely to save when their income is higher.
Expectation of future changes in Income
Uncertainty presents a problem to people on every continent occasionally.
Lusardi (1998) in her analysis of the significance of precautionary saving noted that
individuals facing higher income risk save more. While the rich are faced with the
uncertainty of future changes in income due to some changes in both microeconomic
and macroeconomic policies, the poor are also faced with uncertainty in meeting
present and future expenditures. Guariglia (2001) discovered a similar strong link
between savings and earnings uncertainty. The findings suggested that people should
increase their savings if they anticipate a worsening of their financial status. According
to Brown and Taylor (2006), although financial expectations have an impact on saves,
other factors (including age and education) also have an impact.
26
Financial Literacy
Internal factors such as financial literacy and knowledge can have a big impact
on saving behaviors. According to a study by Lusardi and Mitchell (2014), financial
literacy and saving habits are positively correlated. More financially literate people are
more likely to comprehend the advantages of saving, make wise financial decisions,
and efficiently manage their resources.
Understanding and being aware of financial terms, instruments, and techniques
that help people make wise financial decisions are referred to as having financial
knowledge. According to research, people who are more financially literate tend to
practice more responsible financial behaviors, such as setting aside money for savings
and investing (Lusardi & Mitchell, 2014). Higher financial literacy also increases the
likelihood that a person will manage their debt well, choose financial services and
products wisely, and set long-term financial goals.
Employees who receive financial education may save more for retirement and
possibly invest their assets more wisely in retirement accounts. First, financial
education might encourage families to save more money. The household may become
less risk-averse as a result of increased knowledge, increasing investment in assets with
higher levels of risk and expected return. The lack of financial literacy in society is
particularly problematic for young people. Financial literacy involves specific
knowledge, behavior, and societal expectations regarding financial matters.
(Mokhtar,2018).
Personal Factors
The TODA members' saving behaviors were also found to be influenced by
personal factors. Key determinants included elements like self-control, self-discipline,
27
and financial objectives. Regardless of their income level, people with higher levels of
self-control and discipline were more likely to develop the habit of saving regularly
(Tanaka & Liedholm, 2002). Additionally, having specific financial goals gave people
a sense of direction and motivation to save, which resulted in more enduring saving
behaviors.
A significant internal factor that affects saving behaviors is self-control. High
self-control people frequently display greater financial discipline and are more likely to
engage in consistent saving behaviors. According to a 2011 study by Dohmen et al.,
those with greater self-control were more likely to regularly save and build up larger
sums of money over time.
An additional internal factor that affects saving behaviors is the capacity to set
objectives and make future plans. People are more likely to engage in disciplined saving
behaviors when they set specific savings goals and create clear plans to achieve them.
According to a study by Keng, Keng, and Boon (2016), young adults' saving behaviors
were positively correlated with goal-setting and planning.
Several academics from around the globe have carried out several research
using diverse approaches on the savings behavior of people in various countries and
have described distinct savings causes. For instance, Katona’s (1975) research
demonstrated that Americans in the 1960s saved money for crises (illness,
unemployment), to have money set aside for requirements, for retirement or old age,
for their children’s needs, to purchase a house or durable items, and for vacations. Few
people stated that they were saving money to either leave money to their heirs or to
receive future income (in the form of interest or dividends).
28
Kotlikoff (1989) revealed that about 30% of family saving in the United States
can be explained by motives of a precautionary nature, in particular by anxieties about
old age. From other studies conducted in Holland (Alessie et al., 1997) and in Sweden
(Lindqvist et al., 1978), it emerges that the precautionary motive is one of the most
important reasons for saving. Johnson (1999), in a study carried out on refugees of
Asiatic origins, revealed that this group saves mainly for emergencies and their
children’s education.
External Factors
It makes sense to look into how external factors affect saving in open
economies. The level of private domestic saving has frequently been examined in this
context and consistently found to be positively impacted by the current account balance
(Edwards, 1995; Masson, Bayoumi & Samiei, 1995). One's habits and views are
products of one's environment, according to Canfield et al. (2000).
His actions are significantly influenced by the company he keeps and the surroundings
in which he lives. A child raised in a warm, loving, and supportive family will have a
different perspective on the world than a child who was raised in a negative
environment and regularly subjected to physical or verbal abuse. Their perspectives and
levels of self-worth are distinct.
Peer influence
Normative and comparative reference-group theory are the theories of peer
influence that are most frequently cited (Festinger 1954; Kelly 1966; Kemper 1968).
The normative reference group establishes standards of behavior as well as norms,
beliefs, and values for individuals. Parison's framework ought to be very useful as a
29
heuristic. The Parsons define influence as any factor that directly affects beliefs to affect
how attitudes and opinions are formed.
Incentives
Some banks offer contractual savings plans whereby the saver is required to
consistently deposit a set amount of money, even if it is small, in exchange for an
interest payment or, preferable, the right to use specific financial services (credit and
insurance). Sherraden, et al. (2005) also noted that institutional model of saving
suggests that institutional factors greatly influence an individual's ability to save. For
instance, the Mit Ghamr bank, now Nasser Social Bank, in Egypt, is one example of
how some of these schemes have already been successfully implemented in a few
African countries. As a result, institutional arrangements like incentives and subsidies
motivate people to save money and continue to build up their asset base. As an
illustration, people join retirement pension plans because it is convenient and appealing
to do so.
Availability of Financial Services
The availability of financial services was found to be a significant external
factor affecting saving behaviors. According to the study, TODA members were more
likely to regularly save when they had easy access to formal financial institutions like
banks or credit unions (Nguyen, 2015). Access to financial services gives people
convenient and safe ways to store their money and helps people develop good saving
habits. On the other hand, it was found that individuals' inability to deposit money and
effectively manage their savings was hampered by their limited access to formal
financial services, particularly in rural areas.
30
Saving practices among TODA members were significantly influenced by
governmental and financial policies as well. Savings behavior can be positively
impacted by supportive policies and programs that encourage financial inclusion and
offer incentives for saving. Incentives such as tax breaks or government-sponsored
savings programs, for instance, encouraged TODA members to save (ILO, 2012). In
contrast, financial obstacles like high transaction costs or a lack of comprehensive
financial literacy programs or the absence of such policies served as barriers to saving
among TODA members.
Barriers
Low Income
Low income is a significant barrier faced by many TODA members, as their
earnings may be limited and irregular. The study revealed that a significant portion of
their income is allocated towards meeting daily expenses, leaving little room for saving
(Cao, 2016). This financial constraint makes it challenging for TODA members to
establish and maintain regular saving habits.
Interest Rates
Interest rates are one of the primary determinants of savings, according to
Mwega et al. (1990). A higher interest rate is generally thought to encourage saving.
Low interest rates, according to McKinnon and Shaw (1973), deter people from
mobilizing their savings and from moving those funds through the financial system.
This eventually has a negative effect on investment quantity and quality,
entrepreneurship growth, and economic growth. However, the relationship between
interest rates and personal savings is not clear-cut because there are two effects that go
against each other when interest rates are raised.
31
Mottura (1972) believes that the sum to be gained by interest rate, even if it is
high, normally has little economic significance to savers, who deposit or invest amounts
in a small average volume. Therefore, the saving behaviour is not merely motivated by
the interest rate and savers do not seem to be particularly interest-sensitive.
Inflation
Athukorala and Sen (2004) support incorporating inflation into the savings
function. The inclusion of inflation is justified for a number of reasons. First, since
wealth has an effect on savings, if consumers have a target level of wealth, savings will
increase as inflation does. Second, inflation makes future income uncertain and may
cause more people to save money out of caution. The less developed nations are
particularly affected by the income uncertainty (Deaton, 1987).
Another barrier that affects TODA members' saving practices is the high cost
of living. Rising costs for things like housing, transportation, and education can make
it challenging for people to set aside some of their income for savings. According to the
study's findings (Bhanot & Persaud, 2005), a high cost of living frequently results in
financial stress and a lack of disposable income for saving.
Lack of Financial Literacy
Another significant barrier identified in the study is a lack of financial literacy.
The knowledge and comprehension of financial concepts, products, and strategies is
generally limited among TODA members. Their inability to manage their money wisely
and make informed decisions is hampered by their lack of financial literacy (Nguyen,
2015). Members of TODA may find it difficult to establish sound saving practices and
may not understand the long-term advantages of saving if they lack the necessary
knowledge and abilities.
32
Access to Financial Services/Incentives
The inability of TODA members to access financial services also prevents them
from saving money. Their ability to deposit money and manage their savings effectively
is hampered by the scarcity of formal financial institutions, especially in rural areas
(ILO, 2012). Without easy access to dependable financial services, TODA members
may use improvised savings methods or struggle to build and maintain their savings.
Another obstacle mentioned in the study is the absence of savings incentives or
support from the government or financial institutions. Lack of saving-incentive policies
or initiatives, such as government-sponsored savings plans or tax benefits, may deter
TODA members from making saving a priority. The study emphasized the significance
of encouraging initiatives and policies to promote and facilitate saving among TODA
members
Summary/Synthesis
This study is all about the Determinants and Barriers if Saving Habits among
NVSU TODA members. Some of the researchers studied about the different factors
that affects the savings of students, rural families and other low-income earners. They
include the different internal and external factors of savings and they also provide the
significance of demographics to the saving habits of low-income earners and the
comparison of some socio-economic factors to the saving habits of people. This study
is different from other study as we researchers will focus more on the Determinants and
Barriers of Saving Habits among NVSU TODA members. This study will investigate
the unique challenges faced by TODA members in developing and maintaining saving
habits, considering their socioeconomic background, and contextual factors related to
their occupation. Thus, there is a need for research that explores the specific barriers
33
and determinants influencing saving habits among TODA members, providing valuable
insights to address their financial needs and promote sustainable saving practices within
this occupational group. While, this study is similar to other studies because we also
want to find out the significance of this different factors to the saving behaviours of
low-income earners.
34
Chapter III
Research Methodology
This chapter deals with the methodology used to conduct the study. It includes
the research design, research methods used, respondents of the study, the instrument
used for data collection.
Research Design
This study aims to investigate the determinants and barriers of saving habits
among members of the Tricycle Operator and Drivers Association (TODA). The
purpose of this study was achieved using quantitative approach, non-experimental in
nature and it is simply descriptive. The quantitative approach was used to further
explore and determine the internal, external factors and the barriers of saving habits
among tricycle operator and drivers association (TODA) members in NVSU.
Quantitative data will be collected through structured questionnaires administered to
the selected TODA members. The questionnaire will include sections on demographic
information, income sources, saving habits, financial literacy, access to financial
services, and perceived barriers to saving. Likert-scale and multiple-choice questions
will be used to assess the determinants of saving habits.
Population and Sample
The Nueva Vizcaya is made up of several municipalities. Its population as
determined by the 2020 Census was 497,432. This represented 13.50% of the total
population of the Cagayan Valley region, 0.80% of the overall population of the Luzon
Island group, or 0.46% of the entire population of the Philippines. The Municipality of
35
Bayombong, is a 1st class municipality and capital of the province of Nueva Vizcaya,
Philippines. According to the 2020 census, it has a population of 67,714 people.
Agriculture is the main industry in the province, together with rice, corn, fruits
and vegetables as major crops. Nueva Vizcaya is a major producer of citrus crops in the
country, principally pomelo, ponkan and oranges. Similar to other province, Nueva
Vizcaya have a lot of TODAs’ where it is also one of the sources of income of some
people.
The target population or the respondents of the study was the members only of
the NVSU TODA. The researchers will choose all the members of NVSU TODA to
create unbiased sample for our research. Random sampling was used in choosing the
TODA members to participate in the study.
Instrumentation/ Research Instrument
The study made use an instrument that has three parts, the personal data sheet,
survey questionnaire and Likert scale.
Personal data sheet was used to gather data for the profile variables like name,
age, income, and family size
Survey questionnaire and Likert scale are composed of different questions
regarding the determinants and barriers of saving habits among NVSU Tricycle
Operator and Drivers Association.
To gather the needed information questions regarding the determinants and
barriers of saving habits among NVSU Tricycle Operator and Drivers Association,
table 1 shows the description of the scale and mean to be used in accomplishing the
questionnaire.
36
Table 1: Likert Scale Means
Description
Scale
Mean
Never
1
1.00-1.75
Rarely
2
1.76-2.5
Sometimes
3
2.51-3.25
Always
4
3.26-4.00
Data Gathering Procedure
The survey questionnaire was validated and quality assured by the statistician and
research adviser. It was also run with 30 samples to test its reliability and internal
consistency using Cronbach’s Alpha. The result from the Internal Consistency is
GOOD. After that, the researchers floated the questionnaires. The researchers conduct
it to the members of the NVSU TODA with the total active members of 76. After the
survey was done, the responses of the respondents were gathered together. Lastly, the
student’s responses from the questionnaire were coded, organized, analyzed, and
interpreted.
Statistical Treatment of Data
The following statistical tools were utilized to achieve the goal of this research:
Cronbach’s Alpha, Frequency count, percentage and mean were used to know and
describe the respondents according to their profile variables and the determinants and
barriers of saving habits among NVSU Tricycle Operator and Drivers Association.
37
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