Open access Articles CC BY 4.0 October 4, 2024

Open Access Article Economics

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

Authors

Authors: Fentahun Admassu Yayeh1,* , Wondaferahu Mulugeta Demissie2

Author info & affiliations
  1. Department Of Political Economy, Amhara Management Institute
  2. Department of Development Economics, Ethiopian Civil Service University
  3. * Author to whom correspondence should be addressed.

Publication: Innovation Economics Frontiers, Vol. 28 No. 1 (2025), pp. 01-13 https://doi.org/10.36923/iefrontiers.v28i1.254

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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

Article information

Keywords
Social CapitalSavings BehaviorFinancial CooperativesEconomic Development
Section
Articles
Issue
Vol. 28 No. 1 (2025)
Pages
01-13
Submitted
July 14, 2024
Published
October 4, 2024
Corresponding author
Fentahun Admassu Yayeh
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