Analyzing the influence of economic and non-economic determinants on willingness to save in financial institutions: a study using structural equation modeling (SEM)

Chhaya Devi (), Manoj Sharma and Yogesh Gupta
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Chhaya Devi: National Institute of Technology Hamirpur
Manoj Sharma: National Institute of Technology Hamirpur
Yogesh Gupta: National Institute of Technology Hamirpur

International Journal of System Assurance Engineering and Management, 2025, vol. 16, issue 8, No 5, 2702-2719

Abstract: Abstract The economic and non-economic elements that influence people's propensity to save in financial institutions are examined in this study. A survey was used to gather information from 400 participants in the districts Hamirpur and Una of Himachal Pradesh. The measurement model's validity and consistency were confirmed by the constructs' strong composite reliability (CR) ratings, which ranged from 0.864 to 0.894, confirming the validity and consistency of the measurement model. The factors' relationships were examined using structural equation modeling (SEM). The results indicate that while non-economic factors like attitude and financial literacy have a medium effect size (f2 = 0.045), economic factors like income and financial institutions have a substantial effect on saving behavior (f2 = 0.369). With significance levels of 1% and 5%, it was discovered that both economic and non-economic factors had a substantial impact on people's propensity to save. The model's ability to describe saving behavior is demonstrated by its coefficient of determination (R2) is 0.638. It is highly recommended that educational initiatives to enhance knowledge of financial planning and investing options, given the significant influence of financial literacy. Families, especially those in joint family structures, would benefit from targeted awareness campaigns focused on the importance of developing structured saving habits and achieving long-term financial security. A higher willingness to save contributes significantly to capital formation and overall economic stability.

Keywords: Economic factors; Non economic factors; Willingness to save (WS); PLS-SEM (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s13198-025-02825-1

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