The impacts of financial linkage on sustainability of less-formal financial institutions: Experience of savings and credit co-operative societies in Tanzania

Ndiege, Benson Otieno; Qin, Xuezhi; Kazungu, Isaac; Moshi, John

doi:10.1016/j.jcom.2014.10.003

Cited by 12 publications

(17 citation statements)

References 11 publications

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“…More also shown in Ndiege et al. () and Fiorillo (), these indicate that many SACCOS depend on external funding than how it should be. In case of resources allocation, SACCOS are over‐investing in Liquid investment (E2) and Non‐financial investments (E4).…”

Section: Empirical Results and Discussionmentioning

confidence: 63%

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Analysis of the Possibilities for Expansion of Services in Tanzanian Savings and Credits Co‐operative Societies: Learning From Economies of Scale

Ndiege

Qin

Massambu

et al. 2015

Ann Public Coop Econ

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Savings and Credit Co‐operative Societies (SACCOS) increasingly recognized as the valuable tool for economic development in low‐income countries. However, recently researchers reported that one of their primary challenges to their expansion is the high level of inefficient. In this study, we analyzed the relationship between growth and efficiency of SACCOS using economies of scale concept. Then we address the role of management of the capital structure and allocation of resources in the expansion of SACCOS. The study used financial statement data from 60 SACCOS in Tanzania for the period of 2004–2011. The findings supports that most of SACCOS are small and cost inefficient because the industry is young, but, the efficiency increases as SACCOS expand. Second the allocation of resources in liquid, financial and non‐financial investment leads to no expansion in SACCOS. Thus, the growth of SACCOS via increasing loan to members, members’ savings, shares, and institutional capital should be encouraged as it increases the efficiency of SACCOS. Also, SACCOS should minimize the allocation of assets in other investments which are different from credit to members.

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Section: Empirical Results and Discussionmentioning

confidence: 63%

“…Second, lessen dependency on commercial loans from formal financial (Ndiege et al. ). Also, trim down the dependency on the support from the government (Tesfamariam et al.…”

Section: Empirical Results and Discussionmentioning

confidence: 99%

Analysis of the Possibilities for Expansion of Services in Tanzanian Savings and Credits Co‐operative Societies: Learning From Economies of Scale

Ndiege

Qin

Massambu

et al. 2015

Ann Public Coop Econ

Self Cite

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“…In this study, the control variables that could influence the relationship between relationship lending and financial performance are included. Financial leverage (LEV) is measured as the ratio between the sum of SACCOS's long-and short-term loans from FFIs and the book value of assets (Ndiege et al, 2014). The loan to deposits ratio (LDR) is defined as the proportion of SACCOS's gross loan portfolio to total deposits.…”

Section: Methodsmentioning

confidence: 99%

“…Consistent with Ndiege et al (2014), Marwa and Aziakpono (2015), and Nyamsogoro (2010), Operational Self-Sufficiency was used as a proxy for SACCOS financial performance. Operational Self-Sufficiency (OSS) is defined as the ratio of operating revenue to the sum of financial expenses, loan loss provision, and operating expenses (SEEP, 2005).…”

Section: Methodsmentioning

confidence: 99%

Relationship lending and financial performance of Savings and Credit Co-operative Societies in Tanzania

Towo

Ishengoma

Mori

2022

AJEMS

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PurposeThis paper examines the influence of relationship lending on the financial performance of Savings and Credit Co-operative Societies (SACCOS) in Tanzania.Design/methodology/approachA panel data of 460 observations representing 115 SACCOS from Tanzania was used. Descriptive statistics and panel regression models were employed to analyse the data.FindingsThe results show that the duration of the relationship is negatively and significantly related to SACCOS financial performance, substantiating the relationship lending theories. The number of relationships has an insignificant effect on financial performance.Research limitations/implicationsThe study focused on the duration and the number of relationships as aspects of relationship lending. The paper is limited in the sense that other aspects of relationship lending such as the concentration of relationships that could affect financial performance are not included in this study. The results apply to SACCOS and not to other microfinance institutions with strong bargaining power.Originality/valueThis study positions relationship lending in the SACCOS context where the market for the wholesale loan is less competitive.

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“…However, those papers do not elaborate on the cooperative funding dimension. This is understandable since studies examining funding structure tend to cover from the banking sector instead of cooperative (see Jung and Kim, 2015;Ndiege et al,2014, Schlueter et al, 2015. There are research works discussing cooperative funding analysis (Santamaria et al 2010;Mathuva, 2016).…”

Section: Introductionmentioning

confidence: 99%

Factors Affecting Cooperative Capital Adequacy (A Survey and Empirical Study of Indonesia's Pancasila Economic System)

Muda

Vitriano

Handika

2020

HSSR

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Purpose of the study: Cooperative plays an essential role in the rural community. This research provides a thorough impact analysis of cooperative funding in the community. This research comprehensively assesses the contribution of cooperative funding to the North Sumatra community, Indonesia. Methodology: Using the Structural Equation Modeling (SEM) and controlled variable regression methods. The independent variables used in this study are Cooperative member main saving, Cooperative member compulsory saving, Cooperative member voluntary saving, and Bank lending. While the dependent variable used in this study is Cooperative capital adequacy. Main Findings: This research finds that cooperative member savings and bank lending play an essential role in the cooperative capital adequacy. Applications of this study: Furthermore, the study finding that bank lending is a relatively cheap source of capital to the cooperative. Novelty/Originality of this study: Also, the study also findings imply that (i) cooperative capital adequacy heavily depends on cooperative member savings, (ii) bank and cooperative are complements rather than competitors and (iii) four dimensions affecting cooperative capital adequacy are stronger in the simultaneous situation. According to findings implied that have three suggestions on the economic policy. First, advise a policy encouraging more participants in the cooperative. Second, advise another policy encouraging banks to do more collaboration with cooperatives. Third, advise that the policy should be integrated rather than stand-alone.

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The impacts of financial linkage on sustainability of less-formal financial institutions: Experience of savings and credit co-operative societies in Tanzania

Cited by 12 publications

References 11 publications

Analysis of the Possibilities for Expansion of Services in Tanzanian Savings and Credits Co‐operative Societies: Learning From Economies of Scale

Analysis of the Possibilities for Expansion of Services in Tanzanian Savings and Credits Co‐operative Societies: Learning From Economies of Scale

Relationship lending and financial performance of Savings and Credit Co-operative Societies in Tanzania

Factors Affecting Cooperative Capital Adequacy (A Survey and Empirical Study of Indonesia's Pancasila Economic System)

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