Cooperative Financial Institutions Research Articles

The influence of training, membership and employee age on turnover intention in co-operative financial institutions

Abstract Purpose Training is an important element of human resource management (HRM) at co-operative financial institutions (CFIs), affecting their performance and their implementation of co-operative principles. Nevertheless, this topic has been fairly unexplored in the literature. In particular, we do not know how training affects turnover intention and how this influence is moderated by employee characteristics like membership (i.e., holding employer shares) and age. Thus, the aim of this article is to examine the impact of training on turnover intention, taking into account employee membership and age. Design/methodology/approach The research hypotheses were formulated using the framework of social exchange (SET) theory and were verified using a sample of more than 1,500 employees sourced from 42 Polish co-operative banks in 2017. The analysis involved two-level linear regression models with two- and three-way moderation. Findings The results indicate that training decreases turnover intention in CFIs. Moreover, this effect appears to be stronger for employee-members than for non-members. Furthermore, moderation through membership only applies to older employees, whereas, among younger employees, there is no difference between members and non-members. Originality/value By investigating the effects of training within CFIs specifically, this article responds to calls to take context into greater account in HRM studies, and also helps find moderators to explain the ambiguity of existing studies about the impact of training on turnover. Moreover, the article makes an important contribution to the co-operative literature by analysing the role of membership in shaping employee turnover intention.

Resilience of cooperatives during global pandemics – Short-term effects of Covid-19 on lending behaviour of British credit unions

Cooperative financial institutions are believed to be less vulnerable to business and economic fluctuations linked to recessions and crises. This paper examines the short-term effects of Covid-19 on the British credit union sector drawing on survey data for 58 credit unions and follow-up interviews with 21 credit union managers. Loan demand, and the volume and value of loans were significantly lower in March and April 2020 after the introduction of government restrictions than in March and April 2019. Bad debt provisioning was also significantly higher in April 2020 than in April 2019. There was no significant difference for loan interest income between April 2019 and April 2020. The findings suggest that credit unions were affected by the pandemic in the same way as other financial institutions. For the majority of the credit unions, the decline in lending may be explained by a drop in consumer demand rather than restrictions put on the supply of credit. It is too early to conclude if the adverse economic conditions caused by Covid-19 will negatively affect the sustainability and ability of the sector to generate surpluses or if the cooperative model will shield the sector from resulting economic fluctuations, as suggested by the literature.

Local Financial Institutions and Income Inequality: Evidence from Brazil's Credit Cooperative Movement

ABSTRACTLocal financial institutions can play a crucial role in reducing income inequalities at the within‐country level by promoting inclusive economic growth and development across time and space. This is against a backdrop of increasing financial and economic fragility, to which emerging economies have also been exposed over more recent decades and years. This article adds emerging economy evidence from Brazil to an empirical literature on the income inequality implications of cooperative financial institutions. Panel‐data estimations for 2004‒19 reveal that Brazilian credit cooperatives have gone beyond commercial banks in supporting communities that have traditionally been underserved financially. Additionally, the article provides new evidence and insights on credit cooperatives’ resilience in the context of a relatively recent but severe economic crisis in Brazil. The results indicate that credit cooperatives have helped fill gaps in finance and economic opportunity that tend to arise in an emerging economy setting. Furthermore, the contribution of credit cooperatives in filling these gaps is found to be more significant at lower levels of development. These findings add theoretical and, importantly, empirical support to the relationship channel of financial inclusion, which is in line with the optimistic perspective in this debate.

Social Capital in Cooperative Memberships and Farmers’ Access to Bank Credit–Evidence from Fujian, China

For rural communities in poor countries to develop, farmers need money to invest in their farms. However, with limited assets of their own and poor conditions for obtaining loans, the farmers’ operations suffer. This study explores how farmers’ chances of obtaining a bank loan are related to the social capital that they receive from their cooperative membership. The data originated from 743 farmers in Fujian province, China, and was analyzed with the help of the instrumental variable probit (IV-probit) regression model. The results show that (a) cooperative members have a higher chance of obtaining a bank loan compared to non-members; (b) cooperative membership positively influences the chances of obtaining a bank loan for farmers with no acquaintances in banks and government or off-farm work; and (c) among farmers with higher financial knowledge, cooperative members are more likely to receive a bank loan than non-members are. Therefore, the conclusion provides empirical evidence for the financial function of cooperatives to farmers. The findings are especially relevant for cooperatives in developing countries, and they call for farmers and cooperatives to establish cooperative financial institutions. Moreover, the research conclusions point out the direction for further improving the financial effect of cooperatives.

Effects of consolidation of cooperative financial institutions in Japan: Evidence from meta‐frontier analysis

AbstractThis study investigates the regional differences in how consolidation has affected the efficiency of Shinkin banks, a representative cooperative financial institution in Japan, using the stochastic meta‐frontier approach based on cost and profit functions. The findings support the quiet life hypothesis that a significant negative relationship exists between efficiency‐adjusted Lerner indices and cost efficiency. By contrast, the relation between market power and profit efficiency is consistently positive. Moreover, independent Shinkin banks not involved in mergers exhibit higher costs and profit efficiency than other banks, suggesting that mergers can deteriorate efficiency.

Low Penetration Rate in South African Financial Co-Operatives: Reasons from Supplier Perspective

Background: The Co-operative Financial Institutions sector in South Africa is small compared to many African countries. Despite the important role that financial co-operatives play in poverty reduction and financial inclusion that is recognised by governments globally, no study has been conducted in South Africa in an attempt to find the reason behind this sector very low penetration rate. This study sought to investigate the possible reasons for the low penetration rate in the sector, focusing on supplier perspective. Aim/Purpose: The purpose of the study is to determine the reasons for low penetration rate in South African CFIs from their own perspective, reflecting on their entrepreneurial and innovative actions or strategies. Setting: The study considered all 28 registered CFIs and Co-operative Banks in South Africa. Twenty of them participated in the study. Method: The study used quantitative design to evaluate objective data. A structured questionnaire was used to collect data from 20 registered CFI representatives around the country. SPSS software was used to analyse data. Results: The study revealed that the low penetration rate in the CFI sector is due to consumer lack of knowledge and awareness about them, their products and their actions. Conclusion: The study concludes that the South African CFI sector needs to adapt and implement a systematic program that will enable them to reach out to more consumers. The findings may also give other stakeholders like the government, a better idea on what they should do to assist the sector.

Financial Distress Prediction of Cooperative Financial Institutions—Evidence for Taiwan Credit Unions

In response to relatively little evidence on the determinants of the financial distress in cooperative financial institutions (e.g., Credit Unions), this paper proposes a distress indicator of Merton Distance to default (Merton DD), which was constructed with a z-score, possessed improved predictive capability, but reducing equity volatility. This model possesses the advantages of both hazard and modified Merton DD model, which could timely reflect market volatility and predict when distress would occur. As a demonstration, we applied this model to forecast the financial distress of credit unions in Taiwan. The results can provide more information to researchers.

Economic Performances of Cooperative Financial Institutions: the Case of Korea

본 연구는 신용협동기구를 중심으로 한국 예금취급기관의 유형별 경영성과 차 이를 분석하였다. 2003~2018년중 일반은행, 저축은행, 신용협동조합을 대상으로 패널회귀분석을 실시하여 금융기관 유형별 수익성과 안정성의 차이를 분석하였 다. 수익성의 경우, 일반은행과 저축은행의 ROA가 신용협동조합보다 높으나 저 축은행의 ROE는 신용협동조합보다 낮은 것으로 분석되었다. Z-score로 측정한 안정성의 경우, 일반은행의 안정성이 신용협동조합보다 높고, 저축은행의 안정성 은 신용협동조합보다 낮은 것으로 분석되었다. 다음으로 금융기관간 경영성과 차 이가 글로벌 금융위기 이후로 어떻게 변화하였는지 분석하였다. 글로벌 금융위기 이후 신용협동조합의 수익성은 다른 금융기관들에 비해 상대적으로 개선되었으나 안정성은 다른 금융기관들에 비해 악화된 것으로 분석되었다. 본 연구는 신용협 동조합의 업무범위 제한 완화, 미시건전성 규제체계 개선, 협동조합의 특성 강화 등을 통해 신용협동조합의 경영성과를 개선하고 금융안정을 도모하는 방안을 제 시한다.

Causes of the low penetration rate in the South African co-operative financial institution sector: A consumer perspective

Causes of the low penetration rate in the South African co-operative financial institution sector: A consumer perspective

Assessment Model Measuring Key Success Factors in Co-operative Financial Institutions to Improve Penetration Rate

Research purpose: This study aims to determine the reasons for the low penetration rate of the South African co-operative financial institution (CFI) sector; and to recommend a valid and reliable tool for assessing key success factors of CFIs. Little research has previously been undertaken on why the South African CFI sector remains small, with a penetration rate of just 0.1%. Research design, approach and method: This study used a quantitative design to evaluate objective data. A structured questionnaire was used to collect data from 303 consumers around Tshwane, and from 20 registered CFI representatives around the country. The SPSS software was used to analyse the data. Main findings: The study revealed that the low penetration rate of the CFI sector is due to consumers’ lack of knowledge about them, their products and activities. An assessment model has been proposed to help address the issue. Practical implication: The assessment model could be a useful tool for CFIs and other micro-credit lenders, as it aims to assist in measuring the effectiveness of their innovation and entrepreneurial strategies and then to initiate the necessary steps and training programmes to address the problem. Original value: The study findings provide empirical evidence on possible reasons for the low penetration rate of South African CFIs; and the proposed assessment model may help to improve membership growth and performance in the sector; particularly as no prior study has been conducted to determine the possible reasons for such a low penetration rate of SA co-operative financial institutions.

ANALYSIS OF TRANSACTION COSTS AND BORROWER'S PERCEPTIONS COMPARISON TOWARD LOAN PROCEDURES IN FINANCIAL INSTITUTIONS IN RIMBA MELINTANG SUB-DISTRICT ROKAN HILIR REGENCY

Poverty is one of the basic problems that Indonesia is still facing. In response to this, the government issues a policy to improve the economic capacity of the community, through financial institutions as a source of capital. Financial institutions have different goals and motivations, so they have some differences in the determination of lending procedures and transaction fees applied, which will affect the perceptions of borrowers. This research is conducted at the BRI financial institution and Sharia Cooperatives (BMT AGROMADANI) in Rimba Melintang Sub-district, Rokan Hilir Regency. This study aims to: First, to identify lending procedures. Second, to analyze the comparison of the amount of transaction costs. Third, to analyze the perception of the borrower. This study uses a survey method with the sampling technique used is purposive sampling and the number of samples used in this study as many as 10 borrowers taken from each of the financial institutions. The results of the study explain that the more procedures or stages that are applied, the financial institutions will take longer to process loan or financing activities. BRI financial institution is more efficient in determining transaction costs incurred by borrowers of Rp. 559,800, compared to the Sharia Cooperative financial institution (BMT AGROMADANI) of Rp. 1,298,000. The average variable of borrowers' perceptions of lending procedures in BRI financial institution is in the score range of 93.66 with very good assessment criteria, while the Sharia Cooperative financial institution (BMT AGROMADANI) is in the score range of 81.66 with good assessment criteria.

PERFORMANCE ASSESSMENT OF COOPERATIVE FINANCIAL INSTITUTIONS USING THE BALANCED SCORECARD CONCEPT

This study aims to determine the effect of the performance of cooperative financial institutions by using the concept of a balanced scorecard. Balance scorecard attributes used as independent variables in this study are financial, customer, internal business, growth and learning perspectives. The cooperative financial institution that is the object of research is the Putri Manunggal Cooperative in Sukoharjo. This research is a type of quantitative descriptive research. The population in this study were the employees and customers of the Putri Manunggal Cooperative, while the sample used was selected through a random sampling technique by distributing questionnaires to 500 respondents. The technique of collecting data is a questionnaire, which is done by giving a set of questions or written statements to the respondents to be answered. The weight of the assessment or the number of the questionnaire results in this study is in accordance with what is described in the Likert scale. The dependent variable in this study is Cooperative Performance (Y), while the independent variables in this study are financial perspective (X1), customer perspective (X2), internal business process perspective (X3), and learning and growth perspective (X4). The data analysis technique of this research uses multiple linear regression analysis, F test, t test, and coefficient of determination (R2) test. The results showed that the financial, customer and internal business perspective variables partially had a significant effect on financial performance. While the growth and learning perspectives have no significant effect on financial performance. Simultaneously the financial, customer, internal business, growth and learning perspectives have a significant effect on financial performance. Keywords: balance scorecard, financial performance, cooperative financial institution

Effects of diversification on bank efficiency: Evidence from Shinkin banks in Japan

This study investigates whether diversification leads to improved performance in Shinkin banks, a representative cooperative financial institution in Japan. Shinkin banks’ soundness is important for the regional financial system on which small- and medium-sized enterprises depend. We consider loan and income diversification and use four measures of portfolio concentration. We find that loan and income portfolio concentrations increase inefficiency, regardless of concentration measures. These findings suggest the importance of Shinkin banks changing their current portfolios, which skew toward mortgage loans and the real estate sector. Furthermore, excessive convergence of the income structure across Shinkin banks reduces efficiency.

Cooperative financial institutions: A review of the literature

Financial cooperatives play an important role in the financial systems of many countries. They act as a safe haven for deposits and are major sources of credit for households and small- and medium-sized firms. A not-for-profit orientation (in many cases) and a focus on maximising benefits to members have ensured the enduring popularity and sustainability of financial cooperatives. This is particularly evident since the global financial crisis when financial cooperatives continued to extend credit to members as many profit-orientated commercial banks restricted credit to households and firms. The overarching theme of the first part of this review is the structural and behavioural characteristics of financial cooperatives. In this part we consider, the origin and diffusion of financial cooperatives, network arrangements, the business model, relationship banking, balancing the interest of members, tax treatment and regulatory framework. The second part has performance and contribution to the real economy as the overarching theme. In this part we consider, efficiency and sustainability, mergers, acquisitions and failures, the benefits (and challenges) of FinTech and the contribution of financial cooperatives to the real economy including during times of crisis. The paper concludes with a summary of what we now know (and do not know) about financial cooperatives and provides suggestions as to where future research may usefully concentrate.

Income structure, diversification strategy and owners’ benefit in cooperative financial institutions

PurposeThe purposes of this paper are twofold. First, it analyses the income structure in cooperative financial institutions and examines how traditional and non-traditional incomes are related. Second, it evaluates whether increasing diversification towards non-traditional incomes facilitates or hampers the benefits of financial cooperative owners.Design/methodology/approachData are collected from over 3,100 US credit unions over the period of 1994–2016. A number of modern econometric techniques are employed throughout the analysis, including the use of panel fixed effect, generalised method of moments (GMM) and two-stage least square (2SLS) methodologies.FindingsUsing US credit unions as the empirical setting, the empirical results reveal that the expansion of traditional income leads to a corresponding increase in income from non-traditional activities. However, an increasing reliance on non-traditional income causes a significant drop in interest margins. The authors also find that the extent to which income diversification affects owner benefit varies across credit union types and period of time. While income diversification negatively affects owners' benefits in single common bond credit unions, it has no significant influence on multiple common bond and community credit union owners' benefits. Third, diversification can be beneficial during crisis time, but can be detrimental to owner benefit during normal time.Originality/valueThis paper provides some of the first empirical investigations on the diversification strategy of cooperative financial institutions. Therefore, the results offer significant policy implications for policymakers and market participants on whether financial cooperatives should diversify or specialise.

Productivity and Social Performance of Co-operative Financial Institutions: Evidence from Vietnam

The major intendment of this study was to discover the interactive relationship between productivity and social performance, in which the productivity measured as a ratio of number of active borrowers to number of staff, the social performance is measured through the breadth of outreach and the depth of outreach. This research used the panel data regression method with research data from thirty-six selected CFIs in Vietnam from 2013 to 2018. The study results discovered that the debt-to-equity ratio, equity growth rate, breadth of outreach and return on equity had positive relationships with productivity and that the depth of outreach, loan-to-deposit ratio, non-performing loans ratio and return on assets had negative relationships with productivity. The age of CFIs, debt-to-equity ratio, breadth of outreach had positive relationships with the depth of outreach; the productivity and financial sustainability had negative impacts on the depth of outreach. The depth of outreach, productivity and non-performing loans ratio had positive relationships with the breadth of outreach; the deposit growth ratio had a negative impact on the breadth of outreach. The research had determined the bidirectional interactions and relationship between productivity and social performance. Based on the findings the study offers policy implication and further emphasizes optimal policies to CFIs management that helps the policy makers, CFIs managers and executives in improving the overall productivity and increasing the social performance of CFIs in Vietnam.

SISTEM PEMBIAYAAN SOSIAL BERBASIS KOMUNITAS

Islamic cooperative is a financial system based on social and solidarity, where its characteristics are different from other financial institutions. This social financial institution is a set of interdependent relationships between financial and social. This paper explains about how the institutional economy in this case the Islamic cooperative understands the form of interaction between individuals, organizations in establishing mutually supportive relationships. What is the form of sustainability of Islamic cooperative financial institutions through its ability to respond to the needs of its members towards the needs of venture capital without applying interest and profit sharing. In the sense of the word form of work of this Islamic cooperative institution based on the concept of help to help members of the cooperative

Factors Affecting Savings And internal lending communities in Informal Finance Groups on Pastoral Communities in Kenya, A Case of West Pokot County

Purpose: This study has explored the factors affecting savings and internal lending communities (SILC). The specific objectives were: financial viability, financial sustainability, financial acceptability and Information and Communication Technology. The literature review is in line with the variables under this study, the target population established was 440 covering Women groups, Youth groups, elder’s council, youth association, livestock trader’s cooperative society, Financial institutions and Government agencies in Kapenguria Division. Keywords: financial viability, financial sustainability, Information and Communication Technology and financial acceptability DOI : 10.7176/RJFA/10-9-03 Publication date :May 31 st 2019

Identidade e imagem por meio do processo de comunicação: um estudo da percepção do associado de uma cooperativa de crédito

Dada a frequente confusão entre instituições financeiras cooperativas e instituições financeiras bancárias, este trabalho cumpre a finalidade de identificar a formação da imagem, que resulta da transmissão de mensagens de suas características próprias (identidade), de uma cooperativa de crédito em seu público alvo, os associados. Para atingir o objetivo proposto realizou-se uma investigação caracterizada como qualitativa e quanto aos procedimentos técnicos como um estudo único de casos em uma cooperativa filiada ao sistema SICREDI. Os dados foram coletados por meio de entrevistas, observação participante e análise de documentos. Os resultados apontam a percepção das falhas que impactam nos processos de comunicação, de construção da imagem e de formação da identidade pelos associados, como a falta de unidade entre as cooperativas filiadas ao sistema, as diferenças culturais e o perfil dos associados, assim como a inaptidão dos colaboradores na apresentação da marca e do cooperativismo ao associado.

The differential impact of the Dodd–Frank Act on niche non-metro lenders

Provisions of the Dodd–Frank Act increase the transparency of real estate transactions between financial institutions and consumers. The Act imposes substantial compliance costs on all financial institutions. In non-metro areas, cooperative lenders may be the only source of real estate loan products. In this study, we investigate whether compliance with the Act has caused some cooperative financial institutions to bear heavier compliance burdens than others and to deduce the subsequent consequences for consolidation and corporate governance. Using a dataset of non-metro credit unions and all agricultural credit associations, we observe that compliance costs have decreased cooperative financial institution financial performance and likely caused the exit or failure to enter smaller institutions. Cooperative financial institutions have redistributed control and operations management instead of wealth.