Effect of deposit mobilization on the technical efficiency of rural saving and credit cooperatives: Evidence from Ethiopia

Abstract

Rural Savings and Credit Cooperatives (RuSACCOs) are small-scale financial service provider enterprises in rural areas. They foster local economic development by mobilizing deposits and lending these out to individuals, families, farmers, and small businesses in the same area. Using balanced panel data of 457 RuSAC-COs from Ethiopia over the period 2014-17, we show how deposit mobilization affects technical efficiency. Our first stage efficiency estimate by Data Envelopment Analysis (DEA) Window model shows the average efficiency of RuSACCOs gradually increased over time. The second stage Tobit censored estimation and bootstrapped truncated regression results confirms our hypotheses for key and control variables effects on technical efficiency. Focusing on rapid expansion during the early life cycle affects technical efficiency. A high percentage of women membership in cooperative enterprises advances technical efficiency. Furthermore, attracting and including all segments of the local entrepreneurial class as a membership opens the possibilities for mobilizing more deposits to become efficient.

Longitudinal Study of Credit Union Research: From Credit‐Provision to Cooperative Principles, the Urban Economy and Gender Issues

“…e global expansion of credit unions is evidenced by the countless number of studies spread over the five continents, both in developed and developing countries [55,56]. us, we find works on initiatives carried out by credit unions in Albania [57], Australia [58], Bulgaria [59], Cameroon [60], Ethiopia [61], Finland [62], Indonesia [17], Ireland [63], Japan [64], United States [65], etc. Research has gradually diversified into works analyzing the conceptual framework of its operation from theoretical [66][67][68] and empirical perspectives [63,69,70].…”

“…ey always have to be implemented under strict ethical-moral conditions, given the solidarity nature of these institutions [72], which makes them regulated by specific legislation [58,63,73], completely different from conventional banking. From the empirical point of view, there are multiple works focused on the rural environment [5,7,61,74], on the credit needs of agrarian communities [57,59,75], and microfinance [5,7,15,17,57,59,60], as one of the few viable alternatives to eradicate poverty in the poorest nations [76,77] and the most disadvantaged local communities of developed countries [78,79]. In this sense, Yunus [80] undoubtedly played an essential role in conceptualizing financial credit as an inalienable right of all human beings [81].…”

“…Independently of their beneficial vocation, they also pursue obtaining an economic benefit to sustain their ordinary operations. For this reason, there is a predominance of research aimed at evaluating their financial performance [59,62,63,[86][87][88][89][90], their growth patterns [52,70,73,91,92], life cycle [93,94], degree of efficiency in credit allocation [54,59,61,64], or their capacity to develop economies of scale [12,[95][96][97][98] according to its relative size [11,12,70,99], which, as a general rule, is usually lower than that of commercial banking institutions.…”

An ExpTODIM-EDAS Based Multiple Attribute Group Decision-Making Framework for Supervision Effectiveness Evaluation of Small and Medium Sized Financial Institutions in Rural Areas under Intuitionistic Fuzzy Circumstances

“…Although the stock cooperative system has made progress and improvements compared to the cooperative system, this property rights model is still not conducive to establishing a corporate governance structure that conforms to the modern financial enterprise system [32][33][34]. The transformation of shareholding system is the core of improving the corporate governance structure of rural small and medium-sized financial institutions.…”

Are farmers technically efficient in growing sorghum crops?: evidence from western part of Ethiopia Gudeya Bila district

“…This helps to emphasize the importance of this research. Furthermore, small farms dominate crop agriculture in Ethiopia's many regions and agro-ecologies for both their own use and sales ( Alemayehu et al., 2012 ; Duguma and Han 2020 ). The sorghum farming system used in the current study in Gudeya Bila district was different from that used in other areas that used oxen.…”