DETERMINANTS OF SAVING CULTURE AMONG HOUSEHOLDS IN KENYA. A SURVEY OF WORKING POPULATION IN NAIROBI COUNTY.

Authors

  • Sarah Momanyi UNITED STATES INTERNATIONAL UNIVERSITY
  • Samuel Wainaina UNITED STATES INTERNATIONAL UNIVERSITY

DOI:

https://doi.org/10.47604/jpid.119

Keywords:

Saving, Culture, Gross Domestic Product, Economic factors, Demographic Factors

Abstract

Purpose: The purpose of this study was to establish the determinants of saving culture among households in Kenya's survey of households residing in Nairobi County.

Methodology: The research used a descriptive research design.  The target population for this research study included the working population in Nairobi County. According to 2009 Census, the entire working population is over 985,016. This study adopted convenience sampling method. The sample size of 150 was arrived at using a sampling formula. Descriptive statistics such as mean and frequencies and inferential statistics such as correlation were used. These measures were calculated using Statistical Package for the Social Sciences (SPPS 17.0) software.

 

Results: The study finding was to establish the motives for savings among working population in Nairobi County. Results led to the conclusion that the top five rated motives for saving were; saving for down payment for durable goods, saving for future emergencies, accumulate funds for starting a business, reserve for future necessities and to gain financial independence in the future.

Other motives that were also rated highly include; to secure the future of their children and their needs, savings plan for the long term, save as a precaution since the future is unknown, inheritance for my children. The least ranked motives were to buy a house or durable goods, old age, holidays, and to have their money tied up for longer periods of time. The study findings also indicated that the level of education is a significant demographic factor that influences saving culture. The study findings indicated that respondents who were more likely to save were highly educated and those that were lowly educated were less likely to save. Furthermore, study findings led to the inference that age is a significant demographic factor that influences saving culture. The study findings revealed that young and middle aged people are more likely to save than old people. Results indicate that marital status is a significant demographic factor that influences saving culture. The study findings indicated that the married were more likely to save than single. Results also indicate that the monthly income is a significant demographic factor that influences saving culture

The results led to conclusion that interest rates affect the amount they saved. This implies that interest rate has a significant effect on savings. Results led to conclusion that statement that the higher the interest rate the higher they save. This implies that higher the interest rate leads to low saving. This further implies that a negative significant relationship exists between interest rate and saving. The study findings also indicate that majority disagreed with the statement that inflation affects the amount they save. The results also indicated that majority agreed with the statement that they tended to save more in an unstable inflation environment. This implies that inflation had a positive effect on saving among working population in Kenya. The majority agreed that the level economic growth affected the amount they saved. The results also indicated that the majority agreed with the statement that they tended to save more during periods of high economic growth. This led to conclusion that economic growth had a positive and significant effect on savings among the working population in Kenya.

Unique contribution to theory, practice and policy: In line with study results, it is recommended that the government and women empowerment organizations need to encourage savings among women. The education systems should be friendly to the working population in Nairobi through lowering of university entry costs and the improvement in the quality of education offered by middle level colleges. This is because it would positively influence savings. The government of Kenya may improve the income of the working population by reducing taxes on income and creating more employment opportunities. This would effectively boost savings. According to results, it is recommended that the government should adjust its fiscal policies by collecting more taxes and spending more as this will improve the level of national income.

Downloads

Download data is not yet available.

Author Biographies

Sarah Momanyi, UNITED STATES INTERNATIONAL UNIVERSITY

POSTGRADUATE STUDENT

Samuel Wainaina, UNITED STATES INTERNATIONAL UNIVERSITY

SUPERVISOR, CHANDARIA SCHOOL OF BUSINESS

References

Agrawal, P., Sahoo, P., & Dash, R. K. (2007). Savings behavior in India: Co-integration and causalityevidence.TheSingaporeEco-nomicReview,55,273-295.

Ahmad M.H., Atiq Z., Alam S., & Butt M.S. (2006). The impact of demography, growth and public policy on household saving:a case study of Pakistan, Asia-Pacific

Athukorala, P & K. Sen (2001). The Determinants of the Private Saving in India. Economic Development and Cultural Change. December.

Aziz, J. & Cui, L. (2007). Explaining China's Low Consumption: The Neglected Role of Household Income. IMF Working Paper series, 07/181 (Washington: International Monetary Fund).

Banerjee, A., Xin Meng, & Qian. N. (2010). The Life Cycle Model and Household Savings: Evidence from Urban China. mimeo, Yale University (New Haven: Yale University).

Browning, M. and T. F. Crossley. 2001. The Life-Cycle Model of Consumption and Saving. In: Journal of Economic Perspectives 15 (3). Summer. 3"”22.

Bureau of Economic Analysis. (2011). Consumer spending rises 0.1% in December. Retrieved May26, 2011, from http://www.bea.gov /newsreleases/ national/ pi/pihighlights.pdf.

Castillo, E. (2009), Process Optimization: A Statistical Approach, NY: Springer (International Series in Operations Research and Management Science), July 2007.

Chandran, E. (2004). Research Methods: A Quantitative Approach with Illustrations from Christian Ministries. Nairobi: Daystar University.

Chowa, G.A (2006). Savings Performance among Rural Households in Sub-Saharan Africa: The Effect of Gender. International Consortium for Social Development. http://www.microfinancegateway.org/gm/document-1.9.41324/08.pdf

Cooper, D.R and Schindler, P.S (2006). "Business Research Methods", 9th, edition. McGraw-Hill Publishing, Co. Ltd. New Delhi-India

Cooper, D.R. & Schindler, P.D. (2000). Business Research methods, seventh edition, New York: Irwin/McGraw-Hill.

Deaton, A. 2005. Involuntary Saving through Unanticipated Inflation. In: American Economic Review No. 67 (5). December. 899"”910.

Denscombe, M. (1998). The good research guide for small scale social research projects. New Delhi. Viva books private limited

DeVaney, S. A., Anong, S. T., & Whirl, S. E. (2007). Household savings motives. The Journal of Consumer Affairs, 41, 174-186..

Epperson, S (2013). Why There Is a Gender Gap in Retirement Savings. Retrieved from http://www.cnbc.com/id/100732440

Falahati, L & Paim, L. (2012). Gender Differences in Saving Behavior Determinants among University Students J. Basic. Appl. Sci. Res., 2(6)5848-5854, 2012

Fisher, P.J (2010). Gender Differences in Personal Saving Behaviors. Retrieved from http://6aa7f5c4a9901a3e1a1682793cd11f5a6b732d29.gripelements.com/pdf/volume_21_issue_1/pattiejfisher.pdf

Floro, M.S. & Seguino, S. (2002). Gender Effects on Aggregate Saving. Policy Research Report On Gender And Development. Working Paper Series No. 23

Gall, M. D., Gall, J. P., & Borg, W. R., (2007) Educational research: An introduction. Boston: Pearson Education.

Harris, M. N., Loundes, J., & Webster, E. (2002). Determinants of household saving in Australia.Economic Record, 78(241), 207-223.

Hebbel, K., B. W. Steven, & G. Corsetti (1992), "•Household Saving in Developing Countries: First Cross-Country Evidence. The World Bank Economic Review, Vol. 6, No. 3. pp.529-547.

Horioka, C. Y. and Wan, J. (2007). The Determinants of Household Saving In China: a Dynamic Panel Analysis of Provincial Data. Forthcoming in Journal of Money, Credit and Banking (accepted December 20, 2006).

IMF. 2009. Global Crisis: Asian Context. Asia and Pacific Regional Economic Outlook, Spring. http://www.imf.org/external/pubs/ft/reo/2009/APD/eng/areo0509.pdf

IMF. 2011. People's Republic of China: Staff Report for the 2011 Article IV Consultation. www.imf.org/external/pubs/ft/scr/2011/cr11192.pdf.

Karen E. Dynan, Jonathan Skinner, and Stephen P. Zeldes. The importance of bequests and life-cycle saving in capital accumulation: A new answer. American Economic Review, 92(2):274{278, May 2002.

Katona, G. (1975). Psychological economics. New York: Elsevier.

Kennickell, A., & Lusardi, A. (2003). Wealth accumulation and the importance of precautionary savings. Retrieved on February 28, 2006, from http://www.dartmouth.edu/~alusardi/precjuly03

Keynes, J. M. (1936). The general theory of employment, interest and money. London: Macmillan.

Kibet, L. K., Muntai, B., K., Ouma, D. E., Ouma, S. A. and Owour, G. (2009). Determinants of

Household Saving: Case Study of Smallholder farmers, entrepreneurs and teachers in rural

Kenya,Journal of Development and Agricultural Economics, 1(7), 137-143.

Mankiw, N. G. (2002): Macroeconomics. Worth Publishers.

Merriam, W. (2003). Collegite Dictionary. Springfied Massachusets: 11 ed.

Modigliani, Franco, and Cao, Shi Larry (2004), "The Chinese Saving Puzzle and the Life-Cycle

Hypothesis," Journal of Economic Literature, vol. 42, no. 1 (March), pp. 145-170.

Mugenda, O. M. and Mugenda, A. G. (2003). Research Methods: Quantitative and Qualitative Approaches, Acts Press, Nairobi-Kenya

National Bureau of Statistics of China. (1999-2008). China statistical yearbook. Beijing: China StatisticsPress.

Ndung'u NS, RW Ngugi (2000) "Banking Sector Interest Rate Spread in Kenya." Kenya Institute for Public Policy Research and AnalysisDiscussion Paper Series No.5. Nairobi, KIPRA.

Osborne, H. (2012). Pension savings gender gap widens. Retrieved from http://www.theguardian.com/money/2012/oct/22/pension-savings-gender-gap-widens

Pratt, B., & Loizos, P. (1992). Choosing research methods- data collection for development

Rehman H, Faridi Z, Bashir F (2010). Households Saving Behavior in Pakistan: A Case of Multan District. Pakistan Journal of SocialSciences (PJSS). 30(1): 17-29.

Robinson MS(2001). Saving Mobilization and Microfinance Enterprise: The Indonesian Experience. West Hartford, Connecticut: KumarianPress.

Rotich, J.K., Walekhwa, C., Too, R. & Koskei, P. (2011). Elements of Research Methods. (4th ed.). Moi University.

Samuelson, P. and Nordhaus, W. 1995. Economics. Fifteenth Edition. McGraw-Hill, Inc.

Saunders, M., Lewis, P., et al. (2003). Research Methods for Business Students. England: Pearson Education Limited.

Shem AO (2002): Financial Sector Dualism: Determining Attributes for Small and Micro Enterprises in Urban Kenya: A Theoretical and Empirical Approach Based on Case Studies in Nairobi and Kisumu.

The Daily (2011). Study: Education and retirement saving behaviours of families. Retrieved from http://www.statcan.gc.ca/daily-quotidien/110519/dq110519b-eng.htm

Torochim,W. (2006). Deductive and Inductive Thinking. Available: www.social research methods. net/kb/dendid. Php

Webley, P., Burlando, R.P., & Viner, A. (2000). Individual differences, saving motives and saving behaviour: A cross-national study. In E. H€olzl (Ed.), Fairness and cooperation. IAREP/SABE 2000.25th Colloquium, Baden, Vienna, Austria (pp. 497-501).

Xiao, J. J., & Fan, J. X. (2002). A comparison of saving motives of urban Chinese and American workers. Family and Consumer Sciences Research Journal, 30(4), 463-495.

Yao, R, Wang, F, Weagley, R.O & Liao, L (2011). Household Saving Motives: Comparing American and Chinese Consumers. Family & Consumer Sciences Research Journal, Vol. 40, No. 1, September 2011 28-44

Zhou, X. (2000). Adjusting household saving motives and stimulating household expenditure.Inquiry Into Economic Issues, 1, 96-97.

Downloads

Published

2016-10-13

How to Cite

Momanyi, S., & Wainaina, S. (2016). DETERMINANTS OF SAVING CULTURE AMONG HOUSEHOLDS IN KENYA. A SURVEY OF WORKING POPULATION IN NAIROBI COUNTY. Journal of Poverty, Investment and Development, 1(1), 16–38. https://doi.org/10.47604/jpid.119

Issue

Section

Articles