Abstract

The adoption of liberalization measures in Kenya culminated in a rise and spread of interest rates in the financial sector. The saving rate has however remained low. Most studies have not been conclusive on factors influencing savings in developing countries. This study adopted a microeconomic approach in investigating the factors that influence savings among households of teachers, entrepreneurs and farmers in rural parts of Nakuru District. The sample composed of 359 teachers, entrepreneurs and farmers was selected through multistage sampling technique from seven rural administrative divisions of the district. Through application of least squares method the main finding was that household saving is determined by: the type of occupation, household income, age and gender of household head, level of education, dependency ratio, service charge, transport costs and credit access. The study is valuable to decision makers in financial institutions, economists and other policy makers. Generally, decision and policy makers in private, government and international institutions concerned with finance and development need to consider the effects of the above factors when making decisions concerning saving.

Key words: Saving, income, dependency ratio, rural, Kenya.