Journal of
Economics and International Finance

  • Abbreviation: J. Econ. Int. Finance
  • Language: English
  • ISSN: 2006-9812
  • DOI: 10.5897/JEIF
  • Start Year: 2009
  • Published Articles: 350

Article in Press

Factors Affecting the Saving Performance of Households in Ethiopia (The case of Dambi Dollo Town): Application of Principal Component Analysis (PCA)

Bazezew Endalew Abegaz

  •  Received: 30 November 2020
  •  Accepted: 06 April 2021
Saving is the most significant component of growth for adequate financial and capital mobilization to finance domestic investment. However, in most developing countries including Ethiopia, the level of households saving was found to be the smallest. Therefore, this research was aimed to identify the factors that affect households saving performance in Ethiopia the case of Dambi Dollo town. An individual base survey along with both descriptive and quantitative methods of data analysis was undertaken. To determine the sample size, the study was utilized the multi stage sampling technique with the determination of 396 sample observations. To analyze the data, both Principal Component Analysis (PCA) and Tobit regression was employed. The inferential result revealed that households’ monthly income level, sample households’ religion of being orthodox followers, age, year of job experience, households poor financial planning habit, and weak infrastructural services were statistically significant at one percent (1%) and ten percent (10%) level. Moreover, this research tried to prove the Keynesian frameworks of positive association between income and saving particularly in the short run, while to some extent negative in the long run (income square as a proxy variable of long run income), whereas it is not compatible with their arguments of saving and age association. The responsible bodies should be able to increase households saving through undertaking possible measurements to bolster domestic saving.

Keywords: Principal Components; Dambi Dollo; Household Saving; kebeles; performance.