MICRO ANALYSIS OF THE DETERMINANTS OF HOUSEHOLD SAVINGS: EMPIRICAL EVIDENCE FROM UGANDA
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The aim of this study was to examine the micro level determinants of household saving in Uganda. This study used household level data obtained from Uganda National Household Survey (2009/2010) conducted by Uganda Bureau of Statistics. Household saving function was estimated using Ordinary Least Squares technique. Prior to the Ordinary Least Squares estimation, the study conducted preliminary analysis which involved presentation of descriptive statistics and a correlation matrix. The results from the OLS estimation reveal that, Income was the main determinant explaining the cross sectional variation of household savings in Uganda. The results show that household income, education of household head, spouse education, gender, age, and household location (living in urban areas) are factors positively and significantly influencing household saving. On the other hand, household size, marital status age square of household head and regional differences negatively and significantly influence household saving. The outcome of the study has various policy implications. Considering the income factor, one way to improve the saving level is by implementing policies that improve productivity and income of households. Institutions that are involved in development projects need to increase their support to improve the business environment of the rural and urban populations. Such decisions include improvement in the transport and communication infrastructure. Also of importance is increased involvement of the government in services that support economic activities in the rural areas such as, electricity, water, extension services and marketing channels. These will motivate households to increase their production, income and hence saving. The government should also increase its funding of the education sector not only to primary (UPE) and secondary (USE) but also tertiary institutions but also to the adult education program that has been running for decades.