Main Article Content
Abstract
Savings are important for resilience, consumption smoothing, and economic growth, but the factors behind the selection between alternative saving channels have not been studied. In this study, the factors affecting the selection of different savings channels by individuals in Tanzania are examined using data from the nationally representative FinScope Tanzania 2023 survey (N=4,041 active savers). The study uses multinomial logistic regression to test for selection between four different saving channels including formal savings, digital/mobile money, SACCOs, and informal saving channels. Findings indicate that possession of a mobile phone, level of institutional trust, and financial education positively affect the probability of using formal and digital saving channels compared to informal savings. The female gender is found to be more associated with using digital savings channels than formal savings channels, illustrating the equalizing power of mobile phones. Living in rural areas positively affects the probability of formal savings but has little influence on digital savings. The research is very informative and insightful in showing significant substitution relationships through bypassing the usual dichotomy of “to save or not to save.” It provides crucial suggestions for policymakers on how to increase financial inclusion within Tanzania as well as other developing nations that have adopted mobile money in Sub-Saharan Africa.