Household Saving Behavior and Its Implications for Social Dividend: Case of Sub-zoba Adi-Keih, Eritrea

Understanding the relationship between household saving behavior and financial security is crucial in developing countries, where economic fragility, poverty, and inequality present significant challenges. This study investigates the determinants of household savings within the sub-zoba of Adi-Keih, Eritrea, emphasizing the critical role of domestic savings in fostering economic stability. Utilizing a logistic regression model, the study is based on data collected from 204 household heads via structured questionnaires. Key findings reveal that educational attainment, household income (particularly from non-farm activities), livestock ownership, and perception toward formal saving institutions significantly enhance saving behaviors. Conversely, high dependency ratios, increased household expenditures, and distance to financial institutions impede saving tendencies. This underscores the importance of improving financial literacy and accessibility to formal saving mechanisms as a critical means to stimulate savings. The study also explores how household savings can generate social dividends, tangible social benefits resulting from collective economic effort and resource utilization, thus influencing overall societal well-being, economic stability, and community resilience. Moreover, the study emphasized the role of household savings as a buffer against economic shocks, enabling families to cope with unforeseen financial crises, thereby promoting stability at both the family and community levels. The study concludes that enhancing economic opportunities, particularly through non-farm employment and livestock-based income, will likely lead to an increase in household saving rates, thereby contributing to the overall economic resilience of Eritrea. Future research should focus on developing strategies to bolster positive perceptions of formal savings and to better integrate marginalized households into the financial sector.