Household savings in rural areas: determinants and empirical insights

Purpose This study examines the determinants of rural household saving behaviour in Odisha, India. Since household savings constitute a major share of total savings in the Indian economy and rural households possess significant saving potential, the paper aims to identify the socio-economic and demographic factors influencing rural household savings and surplus budgeting behaviour. Design/methodology/approach The study is based on primary data collected during 2022–23 from 422 households across four villages in four districts of Odisha – Anugul, Jagatsinghpur, Boudh and Nayagarh. Simple random sampling was used for data collection. To analyse the determinants of household savings, the study employed descriptive statistics, Ordinary Least Squares (OLS) regression, and Binary Logistic Regression models. Diagnostic tests for multicollinearity, heteroscedasticity and normality were also conducted. Findings The results reveal that monthly household income has a positive and significant effect on rural household savings, while monthly household expenditure has a significant negative effect. Household size and the number of bank accounts negatively influence savings, though insignificantly. Mean age and education level of household members positively affect savings but remain statistically insignificant. Agricultural landholding positively influences savings but is not significant. The logistic regression results show that salaried persons, non-agricultural labourers and self-employed household heads are more likely to maintain surplus budgets and save. In contrast, cultivator households are significantly less likely to save. Household liabilities significantly reduce the probability of saving, whereas the cost incurred in saving through financial institutions negatively affects savings insignificantly. Originality/value The study contributes to the limited empirical literature on rural household saving behaviour in Odisha by using micro-level primary data from selected rural districts. Unlike many earlier studies focusing on broader national patterns, this paper specifically analyses rural financial saving behaviour using both OLS and binary logit models. It also highlights the role of financial literacy, financial inclusion initiatives such as PMJDY, SHG linkages and rural cooperatives in enhancing rural household savings.