Savings Of Low Income Households In Northern States Of Malaysia
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Date
2020-03
Authors
Shakil, Nurul Syifaa Mohd
Journal Title
Journal ISSN
Volume Title
Publisher
Universiti Sains Malaysia
Abstract
Savings is measured as income less expenditure. Households save when there
is an excess income to expenditure, and dissave when income decreases or expenditure
increases due to unexpected events. This volatile atmosphere leads us to question as
to how low-income households save. Studies show that low-income households do
save using informal savings mechanisms. The first objective of this study is to assess
the amount of household savings with different savings measurements in Malaysia.
The second objective is to analyse the determinants of household savings in Malaysia.
The third objective is to assess the savings mechanism used by the low income
households in the Northern States of Malaysia. The last objective of this study is to
assess the impact of risks and other factors towards the savings of low income
households in the northern states of Malaysia. In Malaysia, there have been studies
on savings behaviour. The recent study used the Households Expenditure Survey
(HES) data for the year 2004. To extend the studies of households savings in Malaysia,
a new study were done to explore the savings behaviour of households in the Northern
States of Malaysia using the HES data for the year 2014, and Research University
Team (RUT) survey data for the year 2016. HES data is used to study the savings
behaviour of different household groups while the RUT survey data focuses on lowincome
households. Both data focus on the Northern States of Malaysia. The study
found that the factors affecting the savings behaviour of households in the Northern
States of Malaysia are age, gender, educational attainment, employment status, strata
and household size. For the case study on low-income households, the study found
that low-income households do save. The study found that 85.71% of households do save. About 64.97% of low-income households save in wealth savings and 53.74%
save in cash savings. Assets savings has the lowest choice of savings mechanism at
37.41%. The factors affecting savings behaviour of low-income households in the
Northern States of Malaysia are strata, ethnicity, gender, household size, number of
income earners, government assistance, perceptions to higher institutions, perceptions
of ability to save and perceptions on the sufficiency of income. There are some policy
implications for this study. The result shows that the head of households with tertiary
education has higher savings compared to households headed by households with other
levels of education. So, the current government’s effort to promote tertiary education
should be continued. Other than that, the study also finds that households that received
government assistance are more likely to have no savings compared to households that
did not receive government assistance. This shows that government assistance does
help the households in the short term but not in the long term. So, the government
should help, especially low-income households to sustain their life in the long term.
So, the government should help, especially the low income households to sustain their
life in long term. The government can also encourage the low income households to
keep aside some amount of the money from the government assistance for savings. An
awareness campaign can be done to encourage the low income households to save.
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Keywords
Social sciences