The Role of Financial Intermediation in Domestic Savings: Evidence from Savings and Credit Cooperative Societies in Tanzania
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College of Business Education
Abstract
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This paper determines how Savings and Credit Cooperative Societies (SACCoS)
play a role in domestic savings. Panel data from 21 regions of Tanzania mainland, for the
period of 2005-2012, published by the Ministry of Agriculture, Food and Cooperatives, are
used. The study uses panel data regression model in analysis. Findings show that, the
contributions of SACCoS sub-sector in financial intermediation and households’ savings
are commendable. Numbers of SACCoS and number of members are positively affecting
the level of savings and highly significant. However increase in number of SACCoS and
members increases savings to a certain limit where savings start to diminish. Also external sources of funds show negative and significant effects to savings. Other significant factors include year, and gross loan portfolio. The government and policymakers need to develop more conducive environment for economic development and for people to join SACCoS so as to promote domestic savings. Also the linkage between SACCoS and formal financial institutions like commercial banks should be reviewed for the sake of building strong internal saving capacities.
Keywords
Tanzania, Savings, SACCoS, Microfinance, Cooperatives, Financial intermediation, Economic Development and Poverty