Determinants of Financial performance of Primary Saving and credit cooperative Societies in Jimma Zone

Abstract

The study aimed to investigate the determinants of financial performance of primary SACCOs in Jimma Zone, Ethiopia. The objective of the study was based on six factors: leverage, liquidity, managerial efficiency, capital adequacy, SACCO size, and age of SACCOs. The total population of the study was SACCOs in Jimma Zone, and the sample frame selected primary SACCOs in Jimma Zone. The sample size of the study was 12 primary SACCOs, which were determined purposively. The study employed a descriptive and explanatory research design. Secondary data was used for the study, which was collected through document review from the financial statement and audit reports of the year’s 2018 to 2022 using observation and review as data collection instruments. E-View 10 was used for secondary data analysis. Inferential statistics were applied through the use of multiple regression analysis to establish the nature of the existing relationship between the dependent variable and independent variables.Out of the six variables incorporated in the model, capital adequacy, size of SACCOs, and age of SACCOs have a positive and statistically significant influence on the financial performance of SACCOs in Jimma zone. Managerial efficiency has a negative and significant effect on the financial performance of SACCOs. On the other hand, liquidity and leverage have positive and insignificant influences on the financial performance of the SACCOs. The number of primary SACCOs in Jimma is high in number but they are not as strong, so the study recommended that to improve the financial capacity of SACCOs by amalgamating different primary SACCOs into one under the big umbrella. The government official of cooperatives should pay great attention to continuously supervising, inspecting, auditing, and developing regulatory situations to make them financially prudent and enhance the development of infrastructures in different areas where difficulties are being faced on the way to providing financial services