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How to Enhance the Performance of Cooperative Banks in Ethiopia? A Pragmatic Appraisal

Author(s) : R. Dayanandan

Volume & Issue : VOLUME 4 / 2016 , ISSUE 1

Page(s) : 9


Abstract

Agriculture sector is the primary source of food supply in Ethiopia where the small‐scale farming dominates the overall economy and the sector is characterized by limited use of improved input and depends on rainfall. Besides, the agricultural productivity continued to be poor and failed to meet the food demand of the ever growing population. To overcome this, cooperative banks were established with the view of enhancing the agricultural production and productivity by providing different services to the farmers so that their living standard can be enhanced. However, empirical evidence about the performance of cooperative banks in the study area is yet scanty and required to have research in order to realize their potentials in filling the vacuum. Hence, this paper focuses on examining the performance of cooperatives union and the challenges so as to forward suitable strategies to improve the quality of services. To address the objectives, multi‐stage stratified proportional random sampling technique was used to identify 7 primary cooperative banks and the respondents for the interview purpose. To arrive the sample size of 112 members, Yemane (1967) formula was used. Primary data was collected through semi‐structured questionnaires and secondary data was used to assess the functional, growth and financial performance. Collected data was analyzed using ratios, mean and paired T Test with the help of Statistical Package for Social Science (version 20) to arrive the meaningful results. Results showed that a good progress was observed in terms of functional, organizational and growth performance since the multipurpose farmers’ cooperative union establishment. Union helps members in providing agricultural inputs like improved seeds, fertilizers and chemicals with fair price and credit in which progress has been observed year to year which contributes to enhance productivity. However, the low loan repayment behavior of members also found in the study area and this will have negative impact on continuity of loan for members which will have direct influence on overall performance of the cooperative banks. The members of the cooperatives are satisfied with the services rendered by the cooperatives and the union. Based on the findings recommendations are forwarded to enhance the performance of cooperative banks.

Keywords

Financial Performance, Cooperative Banks, Services

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