Social Capital and Saving Behavior in Ethiopia: Evidence from the Amhara National Regional State

Fentahun Admassu Yayeh; Wondaferahu Mulugeta Demissie

doi:10.36923/iefrontiers.v28i1.254

Open Access Article Economics

Fentahun Admassu Yayeh ⁽¹⁾, Wondaferahu Mulugeta Demissie ⁽²⁾

(1) Department Of Political Economy, Amhara Management Institute, Ethiopia,

(2) Department of Development Economics, Ethiopian Civil Service University, Ethiopia

https://doi.org/10.36923/iefrontiers.v28i1.254

Issue
Vol. 28 No. 1 (2025): Continuous

Submitted
July 14, 2024

Published
October 4, 2024

Keywords:

Social Capital, Savings Behavior, Financial Cooperatives, Economic Development

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Abstract

The paper analyzes the impact of social capital on the saving behavior of members of financial cooperatives in the Amhara Regional State, Ethiopia. Explanatory and mixed research methods were employed using a cross-sectional study of 348 stratified and randomly selected financial cooperative members. Primary data was collected through structured questionnaires, focus group discussions, and personal interviews. The data was further analyzed using Probit regression and multiple linear regression models. Three types of social capital dimensions:cognitive, relational, and structuralwere operationalized and measured in terms of members' understanding of shared mission and goals, cooperation, and trust. The results revealed strong evidence that the dimensions of social capital affect the amount of savings and the decision to save voluntarily in a way that yields a return. Our findings suggest that structural and relational social capital, particularly through formal networks, effectively increase both the amount saved and the decision to save. However, the lack of cognitive social capital does not encourage saving behavior. Therefore, it is essential to strengthen the dimensions of trustworthiness, cooperation, and understanding of the shared mission and goals within financial cooperatives. This can be achieved through efficient service delivery, financial workshops, and training programs to guide members toward suitable saving instruments

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Authors

Fentahun Admassu Yayeh

Department Of Political Economy, Amhara Management Institute

https://orcid.org/0000-0002-1722-9173

devtecon04@yahoo.com (Primary Contact)

Wondaferahu Mulugeta Demissie

Department of Development Economics, Ethiopian Civil Service University

https://orcid.org/0009-0006-5087-6686

Author Biographies

Fentahun Admassu Yayeh, Department Of Political Economy, Amhara Management Institute

Fentahun Admassu Yayeh is a PhD student in Political Economy and Governance at Amhara Management Institute. He holds a Bachelor's Degree in Economics and a Master's in Development Economics. He has served as a Monitoring and Evaluation Expert in the Rural Financial Intermediation Program, a Cooperative Promotion Expert, the Rural Financial Intermediation Program Coordination Department Head, and the Director of the Financial Cooperatives Development and Leadership Directorate. He has developed various support materials such as cooperative guidelines, by-laws, feasibility studies, and project preparation and management training manuals. He played a significant role in establishing the Amhara Cooperatives Savings and Credit Federation.

Wondaferahu Mulugeta Demissie, Department of Development Economics, Ethiopian Civil Service University

Dr. Wondaferahu Mulugeta Demissie, born in July 1974, has beenan Associate Professor of Economics since April 11, 2017. He holds a BA in Economics and an MSc in Economic Policy Analysis from Addis Ababa University, Ethiopia, obtained in 1999 and 2003, respectively, and a terminal degree from the University of Andhra, India, earned in 2014. With 25 years of teaching, research, and community service experience across three Ethiopian universities, he currently serves as a full-time academic staff member at Ethiopian Civil Service University (ECSU) in Addis Ababa and as a guest professor at eight other universities in Ethiopia. Dr Wondaferahu has published over 30 articles in reputable journals (indexed by Scopus and Web of Science) and authored the book "Fiscal Policy and Economic Growth in Ethiopia" in 2012.

Yayeh, F. A., & Demissie, W. M. (2024). Social Capital and Saving Behavior in Ethiopia: Evidence from the Amhara National Regional State. Innovation Economics Frontiers, 28(1), 01–13. https://doi.org/10.36923/iefrontiers.v28i1.254

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