Institutions’ Effect on Households’ Choice of Saving Options in Kenya

The study uses a multinomial/conditional probit model to analyze the effect of institutions on households’ saving behavior in Kenya. Data from the Financial Access National surveys is used in the analysis. The key finding in the study is that institutional factors including access to a saving option, incentives in a saving option, information and saving expectations influence the choice of saving options in Kenya. This result suggests that institutional factors influence households’ saving behavior particularly their participation in the savings options. Hence, easing access of savings options, motivating households through incentives, making households more informed of their saving choices and opportunities, and offering financial literacy to households on saving goals and targets are all critical in enhancing households saving participation in Kenya.