A micro-econometric analysis of the determinants of Households Saving Behavior in Uganda- A Multinomial logit modelling approach

Abstract Households have a number of saving choices to make and each of their choices has profound implications for the economy and for their standards of living. To investigate the determinants of household choice of saving mechanism, the multinomial logit model is applied. The main conclusion of this paper is that, employment status, household size, household monthly expenditure, education level, age of the household head, residence of the household, and marital status are significant determinants of household saving behavior in Uganda. It is thus recommended that, policy measures for ensuring financial inclusion should take cognizant of the differences in socioeconomic household characteristics like residence of households with regard to rural and urban based households. Further, increasing the level of education is critical for enhancing financial knowledge and is critical for enhancing adoption of formal saving mechanisms. Targeted policy actions to enhance financial knowledge should be critical in enhancing financial inclusion. JEL : D13; D14, D15