Determinants Of Savings In Sierra Leone: A Household Level Analysis

This study has used household level data from the Integrated Household Survey(IHS) of 2011 to determine the causes and the stability of the savings function in Sierra Leone. Therefore, the objectives of this paper are(i) to ascertain the determinants of household savings in Sierra Leone(ii) To ascertain whether the household’s savings of rural and urban in Sierra Leone has the same patterns.The research is investigating the following hypotheses :(i) The effect of household size on savings in Sierra Leone(ii) Rural and urban households have the same saving patterns; in this regard therefore,In the methodology, an econometric analysis is use in order to establish the determinants of savings in Sierra Leone. This research used the cross-sectional data for one year that is 2011, analysis in the ordinary least squares(OLS) estimation using Stata software package. In order to adequately capture the factors that determine household savings in this period the current study has attempted to examine the principal determinants of savings in Sierra Leone with special emphasis on household saving behavior.Result of this study shows the significant and non significant variables. The coefficient ofhousehold in the rural positive and significant at 5% which implies that household in the rural save more, coefficient of size of household is significant at 1% with a negative sign which means household head with more people save less, coefficient of household in the west is significant at 1% with negative sign that is household head in the west save less, the coefficient of unpoor is significant at 1% with negative sign which implies rich household head save less, the coefficient of household with job is significant at 1% with positive sign which implies household head with job save more, the coefficient of household size square is significant at 1% with positive sign this show that with an increase in the size of the household head will save more and the coefficient of household gender is not significant this mean in sierra Leone, the saving power of household head cannot be determine by his or her gender. The first hypothesis that was laid out was that in the effect of size of household on saving in Sierra Leone, the estimation model the coefficient of the household size is negative and significant at 1%. The finding is line with theory that states that savings are inversely related to the number of household members. The result shows that household size had their greatest impact on savings in this household survey. Looking at the socio-cultural background in sierra Leone, the polygamous and the extended family believes are the main reasons why most household members ranges from 2 to 21 members in a family.Conclusion and recommendations, the present study aimed at filling some information gaps concerning household saving Behavior in Sierra Leone. The results realized from this research will enhance the understanding of savings behavior of households in Sierra Leone and other developing countries. Such findings will help in formulating appropriate policies and programmers with far reaching impact on the, targeted groups. The results and Implications would also be adapted to other economies facing problems similar to Sierra Leone. The study cannot address all the problems involved I therefore recommend that in the subsequent surveys the central statistics of Sierra Leone should increase the number of observations as limited observation were use in this survey.