Impact of Education on Household Saving Behavior in Kyrgyzstan

Abstract

This study analyzes the effect of formal education on the household saving behavior in Kyrgyzstan, as the country experiences poor saving behavior among households that might be closely related to the insufficient conditions of the education system which encounter many challenges. The lack of existing literature on the relationship between education and household savings in Kyrgyzstan represents the main knowledge gap that is going to be addressed. Additionally, the research evaluates the link between risk aversion and household saving behavior in order to make greater contribution to the existing literature on the topic. Quantitative research design is applied for this study using secondary data from the “Life in Kyrgyzstan” household survey in 2016. The probit regression model is applied in order to conduct the regression analysis, because the dependent variable of savings is dichotomous. The results of the analysis show that education and household saving behavior does not have a statistically significant relationship between each other. Whereas, risk attitude demonstrates important influence on the saving behavior of households. Particularly, one unit shift towards risky behavior decreases the probability of saving by 3.5 %. Even though education does not significantly impact household savings, the study suggests further research on the topic using qualitative and mixed research designs. Additionally, the research recommends to provide the population by increasing attempts of informing about savings instrument, and to include financial literacy classes in the educational institutions.