Determinants of Household Savings in Rural and Urban Areas: The Case of Chitral District, Pakistan

Household saving is the source of investment and is considered as an important factor in economic growth. The main objective of this study is to explore important determinants of household savings in both urban and rural areas of Pakistan. Purposive sampling technique was used to select the study areas in Khyber Pakhtunkhwa. The data were collected through a standardized questionnaire from 50 households. Through stratified random sampling, 25 urban and 25 rural household’s heads were interviewed. Simple multiple regression was employed to explore the relationship between a household saving and socio-economic determinants such as income, age, dependency ratio, education, employment status, and marital status. Results showed that overall model was a good fit in both urban and rural contexts. Income, age and employment had a significant and positive association with household savings in both urban and rural areas whereas education had significant negative association with household savings in both areas. However, dependency ratio with negative coefficient was only significant in rural areas. Contrarily, education was found as significant negative determinant of savings in urban areas.