Using Logistic Regression in Studying Factors Associated With Choice of Savings Mechanisms for Households in Kenya
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Date
2022Author
Okeyo, Christine A
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
Savings plays an important role in the lives of individuals in a country. Moreover, saving
using formal means enables them to enjoy benefits such as safe keeping of money as well
as easy access to other financial products such as loans. Despite the growth in access of
financial services in Kenya, there is a segment of the population that doesn’t make use of
such savings products. This study explores the association between financial literacy, access
and use and of technology and socio-demographic variables on savings mechanisms
of households in Kenya. The study used a secondary data source from the 2021 Finaccess
Household Survey.
The main objectives of the study was to examine the association between financial literacy,
access and use of technology and socio-demographic variables on use of formal
savings as well to find a parsimonious model that best defines the relationship. Logistic
regression was fitted to evaluate the association between the independent variables and
households’ use of formal savings mechanisms. Lasso model was then used to determine
variables that were most predictive of using formal savings mechanisms as the most important
saving device. A reduced model was then fitted based on the variables that were
most predictive of the likelihood of households using formal savings as the most important
saving mechanism.
The findings indicated that financial literacy, ownership of mobile phones, use of the internet,
having disability,gender, highest education attained, religion, income source were
significantly associated with use of formal savings as the most important savings mechanisms.
The reduced model was significantly better at predicting the likelihood of saving
formally as the main savings mechanism compared to the full model. The study recommended
that relevant stakeholders should create financial products that are more inclusive
towards certain segments of the population. They can also use the model created to
identify individuals with the least likelihood of using formal savings methods as the most
important one.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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