Determinants of Growth of Employees’ Savings and Credit Associations in Ethiopia: The Case of Addis Ababa University, Ethio Telecom and Ethiopian Airlines Employees’ Savings and Credit Associations
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Date
2014-11
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Addis Ababa University
Abstract
Employees’ savings and credit associations (ESCAs) in Ethiopia have been investing
over the years with the objective of maximizing their wealth. As is the case with all
investments, wealth maximization is a key objective whenever ESCAs have chosen an
investment avenue from a universe of possible investment vehicles. The failure to build
enough ESCAs’ wealth, through accumulation of institutional capital, is attributable to
weak financial stewardship, inappropriate capital structure and imprudent funds
allocation strategy. This study assessed financial practice as a determinant of the growth
of employees’ savings and credit association with a view of improving the situation for
socio-economic development. This study used descriptive design and data was collected
from the respondents and financial records of the three ESCAs using a questionnaire and
document review tool, and analyzed using both descriptive and inferential statistics. The
study findings indicated that growth of ESCAs depended on financial stewardship, capital
structure and funds allocation strategy. The study recommends that ESCAs credit policies
should be the one that would enhance the evaluation of loan applications; ESCAs should
make loan provisions to promote safety of funds, and apply optimum financing mix in
their capital structure
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Keywords
Employees, Credit ssociations, Savings