There are critics about compulsory saving since

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There are critics about compulsory saving since clients have no easy access to their
21 savings. Others argue that compulsory savings should not be called a service because it is a down payment on a loan and it does not respond to accumulation and precautionary savings motives, these two factors affect the decision to save. 2.3 Research Gap The focus of this study was to assess the savings made by members of savings and credit cooperative societies established at workplaces whether they are affected by the saving culture or otherwise. It is obvious that income of members of SACCOS at workplaces is mainly from monthly salaries and wages and differs from one employee to another. However this is not reflected in the reviewed studies. Thus, this study examined the rationale of savings policies used by SACCOS in Tanzania whether they provide environment for members to believe that SACCOS is a safe place to deposit their savings and as an area of investment. The study sought to determine the saving behaviour of income earners from employment. 2.4 Conceptual Framework Based on literature review and the understanding of savings, conceptual framework of effectiveness of savings on loan delivery to SACCOS members was developed. Loans delivery to SACCOS members depends on the amount of savings deposited by members. This framework comprises independent and dependent variable factors. Independent variable factors include income level, inflation, interest rate on savings, education on savings and demographic influence. While dependent variable factors include compulsory locked-in savings and credit risk.
22 2.5 Theoretical Framework With respect to the growth rate of income, the life cycle theory postulates a positive relationship between savings and income growth rate, since higher income growth makes the young richer than the old. High inflation rates are disincentive to savings in monetary terms since they tend to attract funds towards investment in physical assets. High interest rates payable to savings encourage savings than low interest rates. Financial education and counseling directed at facilitating changes in financial management have significant and positive impact on reducing financial problem and improving financial satisfaction.
23 CHAPTER THREE 3.0 RESEARCH METHODOLOGY This chapter addresses an overview of the methodology to be used in the study. Areas covered include the research design, research area and population, sampling and sample size, source of data, data collection and data analysis. 3.1 Research Design The study adopted exploratory research design to assess the effectiveness of savings as a basis of granting loans to members of SACCOS at workplaces. Consequently, structured administered questionnaire with open and close-ended questions as well as interviews were used.

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