This study was initiated with the objective of effect of demographic and socioeconomic factors on saving behavior of households the case of Abay Choman district. For the purpose of the study, cross-sectional data were collected from sampled households, and both primary and secondary data were used. In addition to the questionnaires, experts from credit and saving microfinance institution, and few selected households were interviewed for triangulation of data and analyzed quantitatively. For data analyses, descriptive statistics (frequency distribution, mean and standard deviation), Chi-square test, t-test, and binary logit econometric model were used. The descriptive results of the study showed that 52.17% of the sampled households had savings in formal financial institutions, whereas 47.83% of the sampled households had no savings in the formal financial institutions. Moreover, the study found that household head’s education levels, access to a formal financial institution, income, consumption expenditure, land size, land fertility, family size, and distance from the market were found to have a significant effect on rural households’ saving behavior. Based on these findings, the researcher recommended that emphasis should be given from the government towards financial and educational strategies to improve the rural households’ agricultural productivity and creating accessibility of financial institutions near to the rural households’ residences to promote rural households saving behavior.

Keywords: Household saving behavior, Binary logistic, Regression