Determinants of Financial Performance of Consumer Cooperatives in Addis Ababa

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This study was conducted to examine the determinants of firms’ financial performance of the consumer cooperatives in Addis Ababa. A significant number of studies have been done in the area of financial performance of financial institution and some agricultural cooperatives but consumer cooperative’s financial performance determinants are somehow neglected. The General Objective of the Study was to examine the determinants factors of consumer cooperative’s financial performance in Addis Ababa and to achieve the study objective the research used explanatory research designed. the post-positivist philosophy and quantitative research approach. To this end, the researcher has selected twenty-one consumer cooperatives in Addis Ababa as to which subject best fits the certain of the research. The study used secondary source of data, which is panel data in nature, over the period 2016-2020. The data of audited financial statement were collected from consumer cooperatives and macroeconomic data collected from Addis Ababa plan commission and National Bank of Ethiopia. Furthermore, the assumption of CLRM needed to be fulfilled for GLS or OLS were tested and by using model selection criterion of Hausman specification test random effect model was appropriate to examine the determinants of financial performance. Results using random effect panel regression model exhibited that, Operational expense ratio, Natural Log of firm size, Social contribution and Inflation were negative and statistically significant effect on financial performance. On other hand, variables like Capital structure, Sales growth and Liquidity ratio have positive and statistically significant effect on consumer cooperatives financial performance. Based on the findings, the researcher recommended that the Management bodies of the consumer cooperative should ensure appropriate debit ratio and give greater attention to continuous increasing operating expense ratio because of an increasing operating expense. Besides, Addis Ababa city government administration of Cooperative Agency should adhere tight regulation toward the consumer cooperative sectors. Thus, the overall finding indicates that both consumer cooperative factors and macroeconomic factors had been statistically significant effect on financial performance



Consumer cooperatives, Return on Asset, Return on Equity, Operational expense ratio, Firm size