Abstract:
In recent years, the growth and expansion of saving and credit cooperatives have made a significant contribution to the poverty reduction strategies of developing countries, including Ethiopia, by solving the financial problems of urban and rural inhabitants. Savings and credit cooperatives are financial institutions that are owned, controlled, and capitalized by their members. The overall objective of this study was to assess on determinant of the financial performance of saving and credit cooperatives in Toke Kutaye Woreda, West Shoa Zone, Oromia Regional State, Ethiopia, using protection assets, effective financial structure, asset quality, rate of return and cost, liquidity and sign growth monitoring tools and key ratios. Descriptive research design was used for this study that qualitative and quantitative approach. Out of twenty-seven, five savings and credit cooperative societies were selected purposefully. Among them, 35 respondents were selected through systematic sampling. In this study, both primary and secondary data were collected and used. The primary data collected from the 35 committees and secondary data collected from the audit report of the case study savings and credit cooperatives. The savings and credit cooperatives' protection assets, effective financial structure, asset quality, rate of return and cost, liquidity, and sign growth were found to be healthy but below the standard. The result of the financial ratios of Savings and credit cooperatives were adopted and compared by amount of activity, leverage liquidity, and member’s investment ratio. Degree activity, leverage, liquidity and members' investment ratios were modest and on the expanding side. The capacity to meet cooperatives’ efficiency ratio in the short term was measured using the activity ratio. The leverage ratio in all savings and credit cooperatives was low. All Savings and Credit Cooperatives were productive (earning) due to current assets greater than current liabilities, which means the current ratio was greater than one. In addition, all savings and credit cooperatives did not experience similar asset growth. Multiple regression model analysis was employed. Multiple regression models show that three variables are positively significant: net institution capital/total asset, net income/average total asset and growth total asset ratio, while three variables are negatively significant: total loan delinquency/gross loan portfolio, total interest (dividend) cost on share (average member share) and non-earning in liquidity/total asset. In the study area was far above the minimum and evidenced that the Savings and Credit Cooperative's current assets were accumulated excessively in the form of cash on hand and at the bank with no adequate returns. However, they registered substantial growth in terms of their total assets and total savings. The percentages of all key monitoring tools for saving and credit cooperatives in the study area were not stable from year to year. All these issues need the attention of all stakeholder groups, including the majority finding as goal owner Federal Cooperative Agency and structurally related offices, to improve the cooperative societies' performance and sustainability and give better benefits to their members as per their designed objectives
