Household Saving Behaviour in Kenya: A Discrete Choice Approach

Isaac Wachira Mwangi


Domestic saving in developing countries remains relatively low compared to the developed World despite its huge significance as a growth and investment stimulant. Recent evidence from Word Bank Development Indicators reveal a decline in the Gross Domestic Savings as a percentage of GDP from 9 percent in 2008 to 5.32 percent in 2018. Kenya’s 2019 FinAccess household survey affirms that households account for a sizeable share of the gross national savings. Although 55 percent of the total adult population hold atleast one formal saving account, gender and geographical disparities in formal saving persist averaging 10 percent and 23 percent, respectively. Viewed against the backdrop of low saving rates and the growing need to enhance saving mobilization to finance Kenya’s overall investment needs, this study utilized binary logit and multinomial probit to model household saving behaviour. The study established that both socioeconomic and household demographic characteristics shape household saving behaviour in Kenya. In particular, uptake of formal saving rises with the level of urbanization and formality of employment but decline with family size. The study recommends investment in financial education and financial literacy programs and promotion of economic activities to boost savings.

Keywords: Discrete choice; Saving; Household

JEL Codes: G21, C35, D11

DOI: 10.7176/JESD/11-4-10

Publication date: February 29th 2020

Full Text: PDF
Download the IISTE publication guideline!

To list your conference here. Please contact the administrator of this platform.

Paper submission email:

ISSN (Paper)2222-1700 ISSN (Online)2222-2855

Please add our address "" into your email contact list.

This journal follows ISO 9001 management standard and licensed under a Creative Commons Attribution 3.0 License.

Copyright ©