Browsing by Author "Akele, Yesewzer"

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    The Influence of Saving Motives on Saving Habit; The Case of Bank Depositors in Addis Ababa City
    (Addis Ababa University, 2015-06) Akele, Yesewzer; Takele, Yitbarek (PhD)
    To achieve either individual or societal long term financial plans, regular saving habit is of a great importance. In modern society, money is usually saved in the form of Bank deposits. These deposits achieved as a result of various saving motives of depositors, which in turn led to saving habits. For instance, Banks give interest rate (motive) in order to make people to prefer depositing regularly (habit).In this regard, there is much debate on whether interest rate determines saving level as it can specially be seen currently in Ethiopia where saving is growing regardless of negative real interest rate. Nevertheless, the main point is that apart from interest rate benefit, which is a motive under control of Banks; depositors have many saving motives, which accordingly affect their saving habit. The study identifies seven saving motives (Bequest, Lifecycle, Independence, Precautionary, Buying Durable Goods, Profit and Calculation) and investigated their influence on saving habit (regular, irregular and not save). To do so, it was analyzed bank saving account depositors response collected using self-administered questionnaires using multinomial logistic regression. This finally helped to understand which saving motive regulates saving habit, and this could in turn enable to design suitable strategies to promote better saving. In addition, the study investigated the most important points depositors prefer to save in Banks, factors depositors look to prefer one bank from the other. It was found out that Lifecycle and Precaution saving motives were important predictors of regular saving. Gender, age, employment status, and having a child showed association with specific saving motives. Marital status and educational level was found out to be insignificant reasons to choose one saving motive from the other. Depositors gave precedence to other saving motives which influenced them to save more at the expense of low (and negative in real terms) interest rate. The improvement on saving knowledge became the first reason that made depositors to increase their saving. The need for safety was found out to be the principal reason to save in a bank. Swiftness of service, proximity of the bank to home or office, and trust were the major criteria to prefer one bank from the other. It was recommended that banks and similar institutions should promote specific goal oriented saving and design financial strategies and products suitable for each saving motives, which in turn could lead to regular saving. Key words: Saving Habit, Saving Motive, Saving Account, Calculation Motive, Banks