Savings habit of the small business owner case study: central business district of Kumasi

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July 2015
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This research presents an empirical study of the underlying reasons of savings habit of the small business owners. The study focused on only savings habit on small enterprises owners. The problem that called for the study is, for the higher economic growth for any country, marginal propensity to save and invest should be higher than spend which also helps to the multiplier process. To the Small Business owners, the marginal propensity to consume is more rather than the marginal propensity to save which seems to be vice-versa in urban SMEs where the marginal propensity to save is more than that of the marginal propensity to consume. To investigate this, a total of 190 business owners from the central business district of Kumasi, were conveniently sampled for the study. Convenience sampling was necessary to select those respondents who have established their own businesses in the district. The study revealed that,business owners don’t save much because of their spending pattern and some were dissatisfied with some aspects of the services in banks they were saving and the factors that influence respondents to operate savings are people influence, marketing promotions by the banks, financial benefits, lower service charges of some banks,Professionalism of bank staff, Reputation of the bank, Flexible banking hours, Branch Location(proximity), Attractiveness & Interior decor of building and services provision which is the highest factor of influence. The study recommended among other things that, financial institutions should embark on special education on proper saving habits and promotional activities to reach the un-banked population especially those who have been saving through informal means (houses, friends, and farms). Furthermore, management of banks must create relationships with their customers as most customers stay with their banks as a result of strong personal relationships with bank staff.
A Thesis Submitted To the Department of Accounting and Finance Kwame Nkrumah University of Science andTechnology in Partial Fulfillment of the Award of the Degree of Master of Business Administration (Finance).