“Determinants of Financial Performance of Employees’ Saving and Credit Cooperative Societies: Evidence from Selected Employees’ Saving and Credit Cooperative Societies in Ambo Town."

Abstract

This study aims to examine the determinants of financial performance in employees’ saving and credit cooperative societies (SACCOs) in Ambo town, employing an explanatory research design. To investigate the determinants of financial performance, three employees' saving and credit cooperative societies were selected as samples, covering the period from 2012 to 2021. Return on Assets (ROA) was used as the financial performance indicator in the research. The independent variables analyzed include asset quality, capital adequacy, liquidity management, and management efficiency. Data were collected from the SACCOs’ annual reports. Descriptive statistics, correlation analysis, and multiple linear regression models were applied using STATA 14. According to the analysis results, asset quality, capital adequacy, management efficiency, and earning ability of the SACCOs have positive and significant effects on the financial performance of the societies, whereas liquidity management has an insignificant effect on the Financial Performance Saving and Credit Cooperative Societies (SACCOs) performance. Based on the findings, it is recommended that the concerned saving and credit cooperative society (SACCO) management take appropriate measures to put their saving and credit cooperative society (SACCO) in a stable profit position.