Analyzing Socio-Economic Determinants of Household Savings in Semi-Urban Tanzania: A Microeconomic Modeling Approach

This study investigates the determinants of household saving behavior among semi-urban households in Tanzania, employing a cross-sectional research design. Data were collected through structured questionnaires from a sample of 200 respondents selected from semiurban communities. To comprehensively analyze saving behavior, the study applied both the Double Hurdle Model and the Zero-Inflated Poisson (ZIP) model, which separately examine the decision to save, and the amount saved. The findings reveal that employment status, awareness of saving practices, and access to financial institutions significantly and positively influence both the decision to save and the amount saved. Conversely, household size, years of education, and household expenditure negatively affect the decision to save but positively influence the amount saved among those who choose to save. Age and risk aversion also showed varying effects across both stages of saving behavior. These results highlight the complex interplay of socioeconomic and demographic factors in shaping household financial decisions. Based on the findings, the study recommends enhancing financial literacy, expanding access to financial institutions, and promoting stable employment as key strategies to improve household saving behavior. The results provide critical insights for policymakers and development practitioners aiming to foster inclusive financial systems and promote economic resilience in semi-urban Tanzanian communities.