(Determination of Household Saving Preferences with Sequential Logit Model: The Case of Turkey)

Abstract

Purpose – In general economic thought, the issue of savings plays a key role for development and growth. Countries reaching a high level of income balance depends on the increase of investments. Among the corporate sectors, the household sector has the highest savings. Therefore, it becomes a necessity to examine the saving behaviour of households.The purpose of this study is to investigate the determinants of household savings and their preferences regarding savings. Design/methodology/approach – In this research, Turkey Statistical Institute (TSI) is published by using the 2017 Household Budget Survey, savings and savings choices of households with sequential logit models were examined. While determining the dependent variables of the model, the households in the data set were divided into two groups as those who first saved and did not. Saving households, on the other hand, are divided into three categories, among those investing in real estate, gold and foreign currency, and other securities Findings – As a result of the research, individuals who own houses and cars tend to save more than those who do not. It was found that the variables of owning a house, owning private insurance, monthly expenditure, household size, age and working time were statistically significant in households' investment in real estate (P <0.05 for each variable). In addition, having private insurance, monthly expenditure, household size, age were statistically significant (P <0.05 for each variable). In terms of marginal effects, the increase in the savings of individuals as their ages increases and the possibility of saving for real estate, foreign currency and gold is important in terms of saving tendency. Discussion – In order for households to make the necessary savings, it is important to raise awareness for financial instruments besides the savings preferences that traditional and risk-free. Education and therefore financial literacy need to be increased.