The role of household savings in linking crop commercialization and multidimensional poverty for sustainable rural development in Ethiopia

Crop commercialization plays a pivotal role in economic development and enhancing welfare. Despite its importance, the causal relationships among crop commercialization, household savings, and multidimensional poverty remain insufficiently understood. This study analyzes data from 2714 rural households surveyed in the 2018/19 Ethiopian Socioeconomic Survey. To address the data’s multilevel structure, we employed two generalized linear mixed-effects models for the mediator and outcome, using inverse probability treatment weighting. We then implemented a multilevel causal mediation framework to examine how crop commercialization influences multidimensional poverty, considering household savings as a mediator. Our findings indicate that rural households that save money experience a 6.5% reduction in multidimensional poverty compared to those that do not save (Estimate: − 0.065; 95% CI [− 0.097, − 0.032]). Furthermore, crop commercialization directly reduces multidimensional poverty by 5.66%, an effect not mediated by increased household savings. This suggests that household savings serve as a weak mediator in the link between crop commercialization and multidimensional poverty. Expanding access to inclusive financial services, such as mobile banking, could help transform the benefits of crop commercialization into sustainable savings and reinforce long-term poverty alleviation. Policymakers should prioritize integrating agricultural commercialization with rural financial inclusion initiatives to ensure short-term income gains lead to lasting reductions in multidimensional poverty and greater rural resilience.