WELLCOME TO MY PRESENTATION

WOLLO UNIVERSITY
COLLEGE OF BUSINESS AND ECONOMICS
DEPARTMENT OF ECONOMICS
MSc IN DEVELOPMENT ECONOMICS(Regular)
COURSE; RESEARCH METHODOLOGY AND
APPLIED ECONOMETRICS
ASSIGNMENT: A RESEARCH PROPOSAL
TITLE:THE FACTORS AFFECTING SAVING
MOBILIZATION IN ALBUKO WEREDA
PREPARED BY:ABIYOT ZENEBE
IDNo: SGSR/252/11
SUBMITTED TO ABEBE FENTAW(PHD)
CONTENTS
1. INTRODUCTION
1.1. Background of the study
1.2. Statement of the problem
1.3. Research questions
1.4. Objectives of the study
1.5. Significance of the study
1.6. Scope of the study
1.7. Organization of the study
CONTI…
2. RESEARCH METHODOLOGY
2.1 DESCRIPTION OF THE STUDY
2.2 RSEARCH DESIGN
2.3 TARGET POPULATION
2.4 SAMPLING FRAME AND TECHNIQUE
2.5 SAMPLING SIZE
2.6 TYPE AND SOURCE OF DATA
2.7 METHOD OF DATA ANALAYSIS AND MODEL
SPESFICATION
2.8. DEFINITION, MEASURMENT OF STUDY
VARIABLES AND HYPOTHESIS
1. INTRODUCTION

1.1 BACK GROUND OF THE STUDY

 Rural households’ savings in developing countries (DC) particularly in Sub-
Saharan Africa remains limited and far behind from other parts of the world.
 Number of data sources to estimate that only about 20% of households in Sub-
Saharan Africa saved their money in formal financial institutions.
 This is due to high levels of unemployment, low level of income, the
engagement of a large proportion of the population in the informal sector and
poor performance of the economy (Karim, 2010).
 The financial service sector in Ethiopia is composed of formal and informal
sectors. The formal sector comprises financial institutions such as commercial
banks, insurance companies and microfinance institutions that are regulated
and licensed by the National Bank of Proceedings of a Conference on Loan
and Saving.
 In addition, the emergence of member based financial institutions such as
saving and credit cooperatives (SACCOs) has also been recognized for the
provision of saving services in Ethiopia.
 The informal sector mainly comprises of financial institutions like Iqub and
CONTI….
 Result of the descriptive analysis of Utilization of
and Factors Affecting Individuals Saving in Ethiopia.
 The Case of Dire Dawa shows that rise in prices of
commodities (inflation) is ranked as the first factor to
retard the individuals’ saving which is followed by
lack of sufficient income of individuals.
 It is obvious that currently the food inflation is much
higher compared to non-food inflation, in Ethiopia;
hence, as long as much of the income of the
individuals is spent on food, it is expected to have
adverse effect on the rate of saving of individuals
(Yonas, 2016).
CONTI…
 The study assessed saving habits residents of zonal capitals
using various saving mechanisms, and its determinants in
Amhara National Regional State, Ethiopia.
 This study showed that 62.1% of the households in the
community have savings through various saving institutions
in the Amhara Regional State which is much higher than the
average gross saving rate as percentage of GDP of Ethiopia,
which is 21%.
 This study revealed that households who were merchants save
more than government employed households.
 This may be due to the uncertain nature of their income;
merchant households have a higher interest for saving
compared with government employees who were certain
about the flow of their income (Haile et.al, 2017).
1.2 STATEMENT OF THE PROBLEM
 The result of the study on saving behavior and
determinants of saving mobilization on rural
financial cooperative in tigray region by using least
squares method showed that savings mobilized is
determined by household annual income, livestock
holding, amount of loan borrowed and year of
member stay in the cooperative.
 These factors therefore have to be considered in
designing strategies aimed at improving the saving
mobilization of cooperative members in the study
area (sebhatu, 2012)
CONTI….

 The economic analyses shows that income, age, sex,

marital status, forms of institutions used for saving and
frequency of getting money are significant
determinants of household savings.
 In addition the common reasons for households not to
save are low income, inflation, low interest rate,
cultural background, education, social affairs and
unemployment.
 The planning and expenditure controlling habit of
most respondents was found minimal (Tsega , 2015).
 Income level, literacy rate and the transaction cost
plays important role in savings mobilization; the
CONTI…..
 The Studies have not been conducted to assess factors
affecting saving mobilization in Albuko District.
 Event in other area Most of the time many researches
done at macro level and have not asses the performance
of saving mobilization in micro level.
 And also the above mentioned studies that studied before
not include major determinants of saving mobilization
such as religion, residence (location) and service quality
of institution.
 Thus, this study is initiative with the objective of
identifying forms of savings of rural and urban
individuals and identifying major factors affecting
saving mobilization in the study area.
1.3 RESEARCH QUESTIONS

 The researcher will conduct on this title will try to

answers the following questions:-
 What are the characteristics of individual who live in
study area?
 What are the main factors affecting saving mobilization in
rural and urban households under Albuko woreda?
 What is the performance of financial institution on saving
mobilization in Albuko woreda?
 What is the form of individual saving in study area?
1.4. OBJECTIVE OF THE STUDY
1.4.1 GENERAL OBJECTIVE OF THE STUDY
The general objective of the study is to examine the factors
affecting savings mobilization in Albuko woreda.
CONTI…
1.4.2 SPESFIC OBJECTIVES OF THE STUDY
 To describe the characteristics and saving form of individual in study
area.
 To assess the financial institution performance on savings mobilization
in rural and town at Albuko woreda. To identify and evaluate each bank
specific factors affecting saving mobilization in the study area.
1.5 SIGNIFICANCE OF THE STUDY
 It will use the base for government policy and financial institution that
expands saving mobilization.
 It will use as source for the researcher who conduct the research related
to this thesis.
 It is source of idea for individuals who save in formal financial
institution.
 It will contribute the movement in a way that spends an effort in
changing the attitude of the society, towards saving.
1.6 SCOPE OF THE STUDY

 Conceptually, the study wills focus on factors affecting savings

mobilization in woreilu woreda.
 Geographically, the study is confine to four kebeles of Albuko woreda.
 This study will focus on factors affecting savings mobilization south wollo
zone Albuko wereda.
1.7.ORGANIZATION OF THE STUDY
 This study will has five chapters the first chapter introduction that are back
ground of the study, statement of the problem, objective, significance and
organization of the study .
 Chapter two includes reviews the related theoretical and empirical
literatures in the area of study.
 In chapter three research methodologies such as model specification and
data type and source will be discuses.
 The estimation procedure employed and findings are discussed in chapter
four. And finally, conclusion and recommendation will found in chapter
five.
2. RESEARCH METHODOLOGY

2.1 DESCRIPTION OF THE STUDY

 Albuko is one of the woredas in the Amhara Region of Ethiopia .
 This woreda is named for one of the "Houses" or subgroups of the
Wollo Oromo that used to govern the area and is still located there.
 It is located at the eastern edge of the Ethiopian highlands in the
Debub Wollo Zone, is bordere Albuko on the south by North schewa,
on the south west by worielu , on the notrth west kalu woreda on the
north east by Wollo romo and on the south east by.
 Towns in Albuko include jib guri and Gerardo
 Amharic was spoken as a first language by 99.47%. The majority of
the inhabitants were Muslim , with 89.03% of thepopulation reported
as practicing that belief, while 10.44%of the population said they
professed Ethiopian Orthodox
2.2 RSEARCH DESIGN

 The major focus of the study is description of information related

to factors affecting saving mobilization of Albuko woreda by
collecting cross sectional data from the study area.
 So, the research method used for the study was descriptive
research design to answer research questions.
 Moreover, Binary logistic regression model will apply for
independent or explanatory variables which show a significant
effect on the saving mobilization of individual who live in Albuko
woreda.
2.3 TARGET POPULATION
 For this study, the researcher will select individuals as a target
population who live in Albuko woreda at four specific kebeles such as
town Salmene kebele 01 and 02, Degaga 03 Tossa Flana and kabie 05
Jema Nguse.
 The numbers of population who live in the above selecting kebeles are
2.4 SAMPLING FRAME AND TECHNIQUE

 A sampling frame is the list of elements from which the sample will be
drawn. For this study the participants from farmers, employees and
business men.
 In order to get representative data about the parameter sampling techniques
of the research is so essential.
 In this study the researcher will uses Stratified Random Sampling involves
dividing population into subgroups such as farmers, employees and
business men and then taking a simple random sample in each subgroup.
2.5 SAMPLING SIZE
 Yamane(Taro, 1967), provides a simplified formula to calculate sample
size assuming a 95% confidence or risk level (based on the ideas
encompassed under the central limit theorem) and level of precision or
sampling error (e) to be 5% (the range in which the true value of the
population is estimated to be.
 Due to time and the nature of the population sample determination method
developed by Yamane will be applied to determine a sample size.
CONTI….
 Thus the sample size from the total population will be determined
using the following formula. Where N= Total target population
n = sample size and e =sampling error=5%
N
n= _____
1+N (e)2
 Hence n= 20345/ [1+20345 (0.05)2]
n=20345/51.86=392
n1=392(5892/20345) =113, Salemene twon kebele 01
n2=392(5581/20345) =108Degaga kebele 02
n3=392(4325/20345) =83, Tossa Felana kebele 03
n4=392(4547/20345) =88, Jama Nguse 05
 Therefore, the researcher will take the total sample size of 392 from
four selective kebeles then taking a simple random sample in each
2.6 TYPE AND SOURCE OF DATA

 The data use for this study is both from primary and secondary
data types.
 The primary source of data involves surveys conducted on
sample of farmers, employee from commercial banks, and
informal financial institutions (Idirs), found in Albuko woreda.
 This primary data is cross-sectional type which includes both
qualitative and quantitative information by using questionnaires
distribute to Selective population who live in Albuko wereda.
 In addition to questionnaire, the researcher will utilize
interview to collect available data.
 The secondary data source includes published & unpublished
documents, internal reports, books and literatures related to the
study.
2.7 METHOD OF DATA ANALAYSIS AND MODEL
SPESFICATION
 The tools for quantitative data analysis are descriptive statistics such
as Percentages, frequencies, mean and standard deviation will
available for demographic variables that affect saving mobilization
and form of saving in rural and urban under Albuko woreda.
 Moreover, Binary logistic regression analysis will be applied for
identifying significant factors affecting saving mobilization.
Logistic probability model is econometrically specified as follows

 Here e is the base of the natural logarithm.

Xi represents the ith explanatory variables; Pi is the probability that an
individual is being saver from a given Xi. α& βi are regression
parameters that will estimate.
Conti….
Taking the natural logarithm of equation

If the disturbance term Ui is taken into account, the logit model becomes

Yi=α+βXi+µ
Yi 1 if an individuals are saver who live in Albuko wereda
0 if individuals are not saver who lives in Albuko wereda
Where:
Yi: the observing individual’s saving of Albuko woreda α and β are Vector of
unknown parameters of population or coefficient of independence variables
Xis’ are vectoring of independent variable that affecting saving mobilization.
Such as Age, marital status, Number of dependents, income, level of education,
quality of service, performance of banks employee, religion, residence and
family size.
2.8. DEFINITION, MEASURMENT OF STUDY VARIABLES AND HYPOTHESIS

2.9.1. DEPENDANT VARIABLE

 SAVING MOBILIZATION
 The dependent variable has a dichotomous nature measuring rural
households’ savings status in formal financial institutions in the year
2016/2017.
 This is to distinguish or discriminate between those savers and non-
savers in the study area. It takes a value of 1 if the individuals save in
formal financial institutions other wise 0.
2.9.2. INDEPENDAT VARIABLES
 The study considers independent variables that include; demographic
(education level, sex, age, marital status, family size), socio-economic
(religion, annual income), institutional (residence or distance from
financial institutions, access to credit and service delivery of the
financial institution or quality of service, performance of banks
CONTI….
 Annual Income (ANINC): it is a continuous variable and operational as
the total annual earnings of individuals from sale of agricultural produce,
off-farm and non-farm activities, from government and trades.
 Number of dependents (NOD); it is continues variables that are total
number of individuals who are not capable to do with in families and
unable to save. It is theoretically expected that dependency has the
tendency to reduce the possibility to save (Yonas, 2016). According to
this finding the researcher estimate that number of dependency will affect
saving mobilization negatively.
 Access to credit (ACCRT): it is a dummy variable that assumes a value
of “1” if the individuals are credit users and “0” otherwise. The amount of
credit receive is expect to have positive relationship with saving
mobilization.
 Quality of service (QOS); it is categorical variable that very high, high,
low and no quality of service. The researcher will expect quality of
service that provide by financial institution for the individuals is positive
effect on saving mobilization.
CONTI…
 Performance of financial institution (POFI); it is categorical variable
that very high, high, low and no performance. The researcher will expect
performance of employee has positive impact on saving mobilization.
 Education level (EDUL): it is a categorical variable that below grade 12,
diploma, degree and above. Based on this Hypostatize that educated
individuals have a higher probability of saving and it has positive effect for
saving mobilization.
 Marital status (MARTS): it is a dummy variable and takes a value of 1 if
they are married, if they are single 2, if they are divorced 3.
 An individual is married, his/her rate of monthly saving increases by 12.91
percent; as age of an individual increases by a year, his/her rate of monthly
saving increases by 0.39 percent (Yonas,2016). Then the researcher
estimates that marital status has effect of saving mobilization in study area.
 Sex (SEX): it is a dummy variable that assumes a value of “1” when the
individuals are male, “0” if they are female.
 They expect effect of sex of individuals has statically significance of saving
mobilization.
CONTI….
 Age (AGE): is a continuous variable, defined as the individuals age
at the time of the study measured in years. The researcher expects that
the effect of age on saving mobilization negative.
 Family Size (FAMSIZE): this is a continuous variable measured by
numbers and it refers to the total number of family members of the
household. The researcher expects effect of family size on saving
mobilization is negative for households who have large family size.
 Religion (RELIG): this variable is a dummy variable which takes a
value of 1 for orthodox,2 for Islam, 3 others. The researcher expects
effect of religion on saving mobilization is negative.
 Distance from financial institutions (DISTFIN): it is a continuous
variable measured in kilometers. Identified distance remains a major
barrier to formal financial saving and other markets in rural areas. As
rural households far from formal financial institutions, the expect
effect on saving mobilization will be negative.
 THE END
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