On Saving and Credit Cooperatives’ Outreach The Effects of Governance : The Case of Addis Ababa Saving and Credit Cooperatives
No Thumbnail Available
Date
2021-06
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
A.A.U
Abstract
Saving and credit cooperatives has been growingly playing essential role enhancing the welfare
of the society during the last few decades. Despite their great contribution, they are facing
several challenges that typically emanates from their organizational and governance problems.
Consequently, many studies have been undertaken on saving and credit cooperatives that
targeted to examine the nature and consequences of their governance. However, many of them
have approached the subject focused on the relationship between an aspect of governance and a
chosen measure of performance. This partly has led to quite huge lack of consistency in the
research outcomes pertaining to the essential nature of the relationship between governance and
performance of saving and credit cooperatives.
The purpose of this research is to underline the true nature of the relationship between
governance and outreach of saving and credit cooperatives in Addis Ababa. Explanatory research
approach is employed, and mainly secondary data are used with supplementary primary
information. The study used a panel data framework that pools observations on cross-section of
units over the last three years periods (2017/18 to 1019/20). The unit of analysis are 232
currently operational primary saving and credit cooperatives that are enrolled under Addis Ababa
saving and credit union. Samples of 60 units are randomly taken and primary data are collected
using self-administered semi structured questioner and secondary data are collected using
documents review.
The research statistically examined whether the data met the underlying assumptions of ordinary
least square method. Then Pearson correlation analysis has been carried out to examine the net
effects of each explanatory variable over the response variables. Finally, the nature and
magnitude of the relationship between governance and outreach is underlined through the
analysis of the joint effects of the explanatory variables on the response variables using multiple
regression technique. The study has found that the independent variables board competency,
board meeting frequency, and internal control mechanism have strong positive effects on
outreach of SCCO both in terms of the number of clients served and the average loan size. It has
also found that weak positive association exists between the explanatory variables board size,
board diversity, and incentive mechanism with the response variables number of borrowers and
the average loan size.
Description
Keywords
Credit Cooperatives, Effects of Governance