Journal of Economics and Financial Analysis, 5 (1), pp. 17-41, [2021]

Social Influence and Saving Behavior among small business owners in Uganda: The mediating role of Financial Literacy



The aim of this study was to examine the direct and indirect effect of social influence and financial literacy on saving behavior Explanatory research design and systematic sampling technique was used to collect data with the aid of a questionnaire from a sample size of 430 micro and small enterprise owners in Kampala, Uganda. Reliability test of the research instrument was done by the use of Cronbach alpha. In order to test the hypothesis, and the mediation effect, bootstrapping procedure was followed by testing the direct and indirect effect. The findings show that the connection between social impact and saving behavior is mediated by financial literacy, thus providing new information in research literature on emerging economies where social influence does not encourage saving behavior, hence a need for these economies to adopt financial literacy. Finance scholars have to recognize the central role of financial literacy through financial workshops/seminars, trainings in order to nurture individuals into appropriate saving instruments.


Social Influence; Financial Literacy; Saving Behavior.

JEL Classification

A13, G41.

Full Text:


Abebe, G., Tekle, B. & Mano, Y. (2016). Changing Saving and Investment Behavior: the Impact of Financial Literacy Training and Reminders on Micro-business CSAE Working Paper Series 2016-08. University of Oxford: Centre for the Study of African Economies,.

Alekam, E., Mohammed, J., Salleh, B., & Salniza, M. (2018). The Effect of Family, Peer, Behavior, Saving and Spending Behavior on Financial Literacy among Young Generations. International Journal of Organizational Leadership, 7, pp. 309-323.

Ameliawati, M., & Setiyani, R. (2018). The influence of financial attitude, financial socialization, and financial experience to financial management behavior with financial literacy as the mediation variable. KnE Social Sciences, 811-832.

Ariffin, M.R., Sulong, Z., & Abdullah, A. (2017). Students’ Perception towards Financial Literacy and Saving Behavior. World Applied Sciences Journal, 35(10), pp. 2194-2201.

Arinaitwe, A., & Mwesigwa, R. (2015). Improving credit accessibility among SME’s in Uganda. Global Journal of Commerce and Management Perspective.

Arnone, W.J. (2004). Educating Pension Plan Participants, Pension Research Council Working Paper. Philadelphia: The Wharton School, University of Pennsylvania.

Atkinson, A., & Messy, F.A. (2012). Measuring financial literacy.

Avdeenko, A., Bohne, A., & Frolich, M. (2019). Linking savings behavior, confidence and individual feedback: A field experiment in Ethiopia. Journal of Economic Behavior & Organization, 167, pp. 122-151.

Awais, M., Laber, M.F., Rasheed, N., & Khursheed, A. (2016). Impact of Financial Literacy and Investment Experience on Risk Tolerance and Investment Decisions: Empirical Evidence from Pakistan. International Journal of Economics and Financial Issues, 6(1), pp. 73-79.

Balatti, J. (2007). Financial literacy and social networks-what's the connection?

Bandura, A. (1977). Self-efficacy: toward a unifying theory of behavioral change, Psychological Review, 84(2), p.191.

Bandura, A. (1989). Human agency in social cognitive theory. American Psychologist, 44(9), p. 1175.

Bandura, A. (1990). Perceived self-efficacy in the exercise of control over AIDS infection. Evaluation and program planning, 13(1), pp. 9-17.

Bandura, A. (1991). Social Cognitive Theory of Moral Thought and Action. W. M. Kurtines ve J. L. Gewirtz (Eds.), Handbook of Moral Behavior and Development: Theory, Research and Applications (pp. 71-129). Hillsdale, NJ: Erlbaum.

Bandura, A. (2001). Social cognitive theory of mass communication. Mediapsychology, 3, pp. 265-299.

Bandura, A. (2005). The evolution of social cognitive theory. Great minds in management, pp. 9-35.

Bayar, Y., Sezgin, H.F., Ozturk, O.F., & Sasmaz, M. (2017). Impact of financial literacy on personal saving: A research on Usak university staff. Journal of Knowledge Management Economics and Information Technology, VII(6), pp. 1-19.

Bongomin, G.O. C., Ntayi, J.M., Munene, J.C., & Nabeta, I.N. (2016). Social capital: mediator of financial literacy and financial inclusion in rural Uganda. Review of International Business and Strategy, 26(2), pp. 291-312.

Brounen, D., Koedijk, K.G., & Pownall, R.A. (2016). Household financial planning and savings behavior. Journal of International Money and Finance, 69, pp. 95-107.

Chaulagain, R.P. (2017). Relationship between Financial Literacy and Behavior of Small Borrowers. NRB Economic Review, 29(3), pp. 33-53.

Chaulagain, R.P. (2019). Financial Literacy and Behavior of Small Borrowers in Nepal.

Chen, H., Yu-Cheung, W., & Chan, K. ( 2009). Social capital among older Chinese adults: An exploratory study of quality of life and social capital in a Chinese urban community International Journal of Interdisciplinary Social Sciences, 4, pp. 107-123.

Chowa, G.A., & Despard, M.R. (2014). The influence of parental financial socialization on youth’s financial behavior: Evidence from Ghana. Journal of Family and Economic Issues, 35(3), pp. 376-389.

Cummings, J.N. (2004). Work groups, structural diversity, and knowledge sharing in a global organization. Management science, 50(3), pp. 352-364.

Dangol, J., & Maharjan, S. (2018). Parental and Peer Influence on the Saving Behavior of the Youth. International Research Journal of Management Science, 3, pp. 42-63.

Delafrooz, N., & Paim, L.H. (2011). Determinants of saving behavior and financial problem among employees in Malaysia. Australian Journal of Basic and Applied Sciences, 5(7), pp. 222-228.

Dinc, M.S., & Budic, S. (2016). The impact of personal attitude, subjective norm, and perceived behavioural control on entrepreneurial intentions of women. Eurasian Journal of Business and Economics, 9(17), pp. 23-35.

Duarte, L., & Oliveira, S.D. (2017). Social capital and savings behavior of the poor: evidence from the field. (PhD).

Forsell, T., Tower, J., & Polman, R. (2018). Development of a scale to measure social Capital in Recreation and Sport Clubs. Leisure Sciences, 42(1), pp. 106-122. DOI: 10.1080/01490400.2018.1442268

Franzoi, S.L. (2006). Social psychology (4th ed.). New York: McGraw-Hill.

Gerhard, P., Gladstone, J.J., & Hoffmann, A.O. (2018). Psychological characteristics and household savings behavior: The importance of accounting for latent heterogeneity. Journal of Economic Behavior & Organization, 148, 66-82.

Hayes, A.F. (2018). Partial, conditional, and moderated mediation: Quantification, inference, and interpretation. Communication Monographs, 85(1), pp. 4-40.

Homan, A.M. (2016). The influence of parental financial teaching on saving and borrowing behavior. University of Groningen.

Huat, S.Y., Geetha, C., Mohidin, A. (2010). Financial Behavior amongst Undergraduate Students with and Without Financial Education : A Case among University Malaysia Sabah Undergraduates, 1, pp. 210–224.

Jalalian, M., Latiff, L., Hassan, S.T.S., Hanachi, P. & Othman, M. (2010). Development of A Questionnaire for Assessing Factors Predicting Blood Donation Among University Students: A Pilot Study. Southeast Asian Journal Of Tropical Medicine And Public Health, 41(3), pp. 660-666.

Jamal, A.A.A., Ramlan, W.K., Karim, M.A., & Osman, Z. (2015). The effects of social influence and financial literacy on savings behavior: A study on students of higher learning institutions in Kota Kinabalu, Sabah. International Journal of Business and Social Science, 6(11), pp. 110-119.

Kampumure, A.C. (2015). Social Capital, Networks, and Knowledge Transfer. The Academy of Management Review, 30(1), pp. 146-165.

Khatun, M. (2018). Effect of Financial Literacy and Parental Socialization on Students Savings Behavior of Bangladesh. International Journal of Scientific and Research Publications (IJSRP), 8. DOI: 10.29322/IJSRP.8.12.2018.p8440

Kim, J., Eys, M., Robertson-Wilson, J., Dunn, E., & Rellinger, K. (2019). Subjective norms matter for physical activity intentions more than previously thought: Reconsidering measurement and analytical approaches. Psychology of Sport and Exercise, 43, pp. 359-367.

Kostakis, I. (2012). Households’ saving behavior in Greece corresponding countermeasures in financial crisis. International Journal of Economic Practices and Theories, 2(4), pp. 253-265.

Kubilay, B., & Bayrakdaroglu, A. (2016). An empirical research on investor biases in financial decision-making, financial risk tolerance and financial personality. International Journal of Financial Research, 7(2), p. 171.

Lajuni, N., Abdullah, N., Bujang, I., & Yacob, Y. (2018). Examining the Predictive Power of Financial Literacy and Theory of Planned Behavior on Intention to Change Financial Behavior. International Journal of Business and Management Invention, 7(3), pp. 60-66.

Lown, J., Kim, J., Gutter, M., & Hunt, A. (2015). Self-efficacy and savings among middle and low income households. Journal of Family and Economic Issues, 36(4), pp. 491-502.

Lusardi, A., & Mitchell, O.S. (2014). The economic importance of financial literacy. Theory and evidence Journal of economic literature, 52(1), pp. 5-44.

MacKinnon, D. (2012). Introduction to statistical mediation analysis. Routledge.

Morgan, P.J., & Trinh, L.Q. (2019). Determinants and Impacts of Financial Literacy in Cambodia and Vietnam. Journal of Risk and Financial Management, 12(1), p. 19.

Okayasu, I., Kawahara, Y., & Nogawa, H. (2010). The relationship between community sport clubs and social capital in Japan: A comparative study between the comprehensive community sport clubs and the traditional community sport clubs. International Review for the Sociology of Sport, 45, pp. 163-186.

Okello, C.B.G., Ntayi, J. M., Munene, J.C., & Nkote, N.I. (2016). Social capital: mediator of financial literacy and financial inclusion in rural Uganda. Review of International Business and Strategy, 26(2), pp. 291-312.

Palamida, E. (2016). Determinants of entrepreneurial intentions: The interrelated role of background, situational and psychological factors. (PhD), Newcastle University.

Rios-Aguilar, C., & Deil-Amen, R. (2012). Beyond getting in and fitting in: An examination of social networks and professionally relevant social capital among Latina/o university students. Journal of Hispanic Higher Education, 11(2), pp. 179-196.

Satsios, N., & Hadjidakis, S. (2018). Applying the Theory of Planned Behaviour (TPB) in Saving Behavior of Pomak Households. International Journal of Financial Research, 9(2), pp. 122-133.

Schagen, S., & Lines, A. (1996). Financial literacy in adult life A report to the Natwest Group Charitable Trust (pp. 36-45): NFER.

Sebikari, K.V. (2014). Critical analysis of the taxation policy on small businesses and entrepreneurial enterprises in Uganda. Journal of Economics and Sustainable Development, 5(10), pp. 12-19.

Sebstad, J., Cohen, M., & Stack, K. (2006). Assessing the outcomes of financial education. Washington, DC.

Shim, S., Barber, B.L., Card, N.A., Xiao, J.J., & Serido, J. (2010). Financial socialization of first-year college students: The roles of parents, work, and education. Journal of Youth and Adolescence, 39(12), pp. 1457-1470.

Shim, S., Xiao, J.J., Barber, B.L., & Lyons, A.C. (2009). Pathways to life success: A conceptual model of financial well-being for young adults. Journal of Applied Developmental Psychology, 30(6), pp. 708-723.

Topa, G., Hernández, M., & Zappalà, S. (2018). Financial Management behavior among young adults: The role of Need for Cognitive Closure in a three-wave moderated mediation model. Frontiers in Psychology, 9(2419). DOI: 10.3389/fpsyg.2018.02419

Turyahikayo, E. (2015). Challenges faced by small and medium enterprises in raising finance in Uganda. International Journal of Public Administration and Management Research, 3(2), pp. 21-33.

Wills, T.A., Ainette, M., & Walker, C. (2015). The Construct of Social Influence Department of Epidemiology and Population Health. Albert Einstein College of Medicine.

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.