Abstract
Interest-free Cooperative society is introduced as a mirror of conventional cooperatives though on the principle of Islamic finance, to mobilise financial resources with the aim of promoting the socio-economic welfare of their members. There is however some restriction to the quantity of savings that could be mobilized. The study therefore assessed the determinants of savings mobilization in interest-free cooperative in Ilorin Kwara State. Data were collected with the use of questionnaire which was administered on 365 members of institution-based interest-free cooperative societies in Ilorin metropolis. Kaiser-Meyer-Olkin (KMO) and Cronbach’s alpha tests were performed to establish the validity and reliability of the research instrument. Logistic regression analysis was conducted and it was found that mode of saving, credit administration, internal governance and member’s awareness have positive effect on volume of savings mobilized and the effects are significant at 5% and 1% level of significance. The study concluded that the mode of savings, credit administration, internal governance, and members awareness affect resources mobilization of Islamic cooperatives in Ilorin metropolis. Direct deduction of savings from salaries, higher level of transparency and accountability, sensitization campaign are recommended for effective and efficient financial resources mobilization in interest-free cooperative societies.
Highlights
The role of cooperative societies in promoting economic welfare of people especially the cooperators cannot be over emphasized
Theoretical Discussion This study is underpinned by Keynesian theory of income, and Katona’s theory of Saving According to Byusa (2016), the theory of absolute income was propounded by Keynes (1936) and held that saving increases when income rises, as more fund will be available after consumption and meeting the basic needs of individuals or household
The proponents of the theory believe that when income level of an individual or household changes positively, the upward movement tends to bring about increase in the level of savings
Summary
The role of cooperative societies in promoting economic welfare of people especially the cooperators cannot be over emphasized. The benefits of having such organizations flow to the entire economy through the multiplier effect Cooperative societies perform such roles as promoting social welfare, education of members, employment generation, self-help and price advantage among others; and all of these will only be possible with availability of sufficient resources at the disposal of the societies. There are some limitations to the quantity of financial resources or funding that could be mobilized by the conventional co-operative societies due to some cultural factors like the perception of some cooperators and potential cooperators whose religious believes are in contrary to some practices within the conventional cooperatives While such cooperators may restrict their participation to small savings of negligible amount, potential cooperators who hold contrary view and are completely excluded will be in search of alternative model for maximizing their social economic welfare. The only viable alternative to conventional https://www.cribfb.com/journal/index.php/ijibm International Journal of Islamic Business & Management
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