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Relative Efficiency of Rural Saving and Credit Cooperatives: An Application of Data Envelopment Analysis

International Journal of Cooperative Studies

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Title Relative Efficiency of Rural Saving and Credit Cooperatives: An Application of Data Envelopment Analysis
 
Creator sebhatu, kifle tesfamariam; Department of Cooperative Studies
Mekelle University
Tesfay, Hailemichael; Department of Accounting and Finance, Mekelle University, Ethiopia
Tesfay, Aregawi; Department of Cooperative Studies, College of Business and Economics, Mekelle University, Ethiopia
 
Subject rural cooperatives
data envelopment analysis, technical efficiency, saving and credit cooperatives
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Description Saving and Credit Cooperatives (SACCOs) have been playing a distinct and important role in rural areas of Ethiopia in terms of outreach, volume of operation and the purpose they serve. The performance of rural financial cooperatives in the mobilization of savings and provision of credit has been inadequate. Therefore, greater degrees of efficiency among rural SACCOs would result in greater access to finance, higher profitability and increased financial services to rural people. In this study we apply the Data Envelopment Analysis (DEA) method to evaluate the relative efficiency of SACCOs in Tigrai region of Ethiopia. Data were collected from 329 rural SACCOs during the year 2012. The result showed that the extent of technical efficiency varies across geographical location and scale size of the cooperatives. From the total of 329 SACCOs, compared to their respective peers, only 18 (5.5%) were identified as relatively efficient with the maximum efficiency score of one. The remaining SACCOs were found to be relatively inefficient with efficiency score of less than one. The average efficiency was 21.3% which indicates that there is substantial amount of inefficiency among rural SACCOs in the study area. Technical efficiency was high for larger SACCOs. In terms of geographical location, the highest mean efficiency has been observed in southern and western zones of the region with a mean score of 0.276 and 0.259 respectively. The most interesting aspect of this study was that most of the efficient rural SACCOs are the ones that received reward from the regional government for their best performance, during the year 2012.
 
Publisher World Scholars
 
Contributor —
 
Date 2013-05-30
 
Type Peer-reviewed Article
 
Format application/pdf
 
Identifier http://wscholars.com/index.php/ijcs/article/view/263
10.11634/216826311403263
 
Source International Journal of Cooperative Studies; Vol 2, No 1 (2013); 16-25
 
Language en
 
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