Differences of Savings Practices: With Special Reference to Matara District in Sri Lanka

Savings consider as a major role of capital accumulation in an economy. Further, economist believe that savings appear as two ways such domestic savings and national savings. However, in the macroeconomic analysis investment function of the savings. Therefore, studies regarding savings are most important to the economic analysis. This paper discusses about the differences of savings practices in term of rural and urban with special reference to Matara district in Sri Lanka. According to literature efforts focused on behavioral changes, particularly strengthening discipline around savings and spending may be more effective for promoting long-term financial well-being. Data collected from a sample from two divisional secretariat (DS) divisions of Hakmana and Matara in the Matara district in Sri Lanka. 150 households were randomly selected from each DS division. Employing a structural questionnaire, the data was gathered. According to this study, while 84% people are encouraged to do savings in the rural sector, 97% of them are encouraged to do that in the urban sector. Further, basic socio-economic factors, occupation is also pointed out much vary in urban sector savings. But, such a variation is not visible in the rural sector savings due to the employees occupied in agriculture base jobs. For evaluate the individual's attitude of saving products done in both the sectors, differences which should be considered for the policy making related financial market in Sri Lanka are reported. It was constructed using a SPAI (Saving product attitude index) under three major factors such as income generation, financial security and future investment. SPAI showed that the majority of the sample in the both sectors consists of satisfactory attitude (while rural is 79%, urban is 67%). Individuals who are in the urban sector are favorable to savings than those in the rural sector. It can be pointed out that the individuals who generate fixed income monthly to savings. Thus, financial institutions leading commercial banks should be introduced new participatory investment programs based on community savings.