Determinants of Rural Household Savings in Bungoma County - Kenya
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The continued estimation of rural household savings using formal savings despite surveys showing that informal saving grew in popularity in a number of African countries (Kenya included) is puzzling. The study examined the rural household saving situation in Bungoma County with the ultimate goal of providing a tenable answer to the principal policy question of what are the determinants of rural household saving in Bungoma County. The study was organized around three specific objectives: to investigate the determinants of rural household saving in Bungoma County; to establish the relative impact of rural household saving determinants in Bungoma County; draw policy implications and propose recommendations consistent with the Kenya Vision 2030's explicit concern for rural sector participation in mobilizing savings for investment. The framework for analysis involved the estimation of an extended saving model derived from the Permanent Income Hypothesis (Friedman, 1957). The study results indicate that permanent income, education level and wealth significantly contribute to rural household saving in Bungoma County. However, expenditure on children education and landholding significantly lead to negative rural household saving. Policies to promote income growth, literacy and wealth creation were recommended.