THE POTENTIAL FOR FINANCIAL SAVINGS IN RURAL MOZAMBICAN HOUSEHOLDS

Many policy makers and businesses erroneously believe that rural populations, particularly in Africa, have no margin for savings over consumption needs. This study examines the potential for financial savings in rural Mozambican households by looking at the determinants of savings behavior. An econometric model for a household's saving behavior was estimated using data from 113 rural households from Nampula province in Mozambique. Results indicate that income, physical wealth, household size, and years of schooling affect a household's savings behavior. The study also finds that Mozambican rural households use their own grassroots associations for many financial services due to the lack of access to formal financial intermediaries