The labor market status exerts a strong impact on the probability of having savings. Employed individuals are more likely than unemployed individuals to save, also self-employed individuals are more likely to save. Retired respondents are more likely to hold savings. Compared to respondents with primary education, individuals with secondary or tertiary education are more likely to save.

Income strongly affects the overall stock of savings. Households in the bottom 40 are 10 percentage points less likely to have any savings – a sizeable effect equal to 23% of the sample mean. Looking more closely at the types of income shows a role for foreign income. Some of the WB countries have a significant inflow of remittances. Recipients of remittances are 13 percentage points more likely to have any savings, and this effect remains significant and of similar magnitude even when eliminating individual countries from the sample which have high / low frequency of remittance receivers. Around 5% of households receive some income in euros, 3% receive a regular income in euros. These households are 11 percentage points more likely to have any savings. Finally, looking at non-financial wealth we find the ownership of real estate increases the probability of having savings. We investigate the role of income in more depth in Table 3 which shows how income interacts with other socio-demographic characteristics in determining savings. Education does not have a differential impact on B40 savers (Models 1 and 2). Retired B40 individuals are less likely to have savings compared to non-retired B40 individuals (Model 5). There appears to be a substitution effect between investment in real and financial assets for B40 savers. B40 individuals who own other real estate are 8 percentage points less likely to save compared to B40 who do not own other real estate which is equal to 17% of the sample mean.

In column 2 of Table 2 we study what other, non-socioeconomic factors, influence whether individuals have savings. We focus on trust and transaction costs.

Trust is an important factor guiding the financial decisions of households, as a growing body of household finance research shows (e.g. Guiso et al., 2008; Balloch et al., 2015; Delis and Mylonidis, 2015; Stix, 2013). To exclude that trust is not a proxy for other determinants of saving instrument participation, we control for risk aversion and individual expectations following Guiso et al. (2008). In addition, Stix (2013) and Brown and Stix (2015) stress that experience of previous economic crises during transition influences saving decisions.

We find that those who think that the economic situation of their country will improve are 5 percentage points more likely to save. Risk averse individuals are 4 percentage points more likely to save. Those who experienced a financial loss during transition are more likely to have savings. Trust has a strong and significant impact on participation in saving instruments even after controlling for risk aversion, expectations and experience of economic crises. We distinguish between trust in non-financial and financial institutions. Respondents who trust their government or the EU are 3 percentage points more likely to save (Table 2, column 2). Looking at whether trust has a differential impact for B40 or T60 households (results not shown), we find that B40 households who trust in the government have a lower propensity to have savings. Unfortunately, we do not have information on which households receive government benefits which would allow a better understanding of the effect.

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