Capital structure and cooperative unions' financial performance in southwest Ethiopia

Bayelign Abebe and Ayalew Ali

International Journal of Business Innovation and Research, 2023, vol. 31, issue 4, 493-514

Abstract: The purpose of this paper was to ascertain the effects of capital structure on the financial performance of cooperative unions. The financial performance was measured using return on asset (ROA) and equity (ROE) while the capital structure was measured using debt ratio, asset tangibility, liquidity ratio and asset size. The examination utilised a unique board model of cooperative unions for the time of 2015 to 2020. The examination uncovered that debt ratio, asset tangibility, and liquidity proportion has a noteworthy and beneficial outcome on the financial performance of cooperative unions. However, asset size has a negative and critical impact on the financial performance measured both in ROA and ROE. The investigation presumes that capital structure has a noteworthy impact on the financial performance of cooperative unions. At long last, the investigation suggests that cooperative unions ought to have an ideal capital structure so as to upgrade the money-related execution and make the colossal incentive to its members.

Keywords: capital structure; cooperative unions; financial performance; Ethiopia. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbire:v:31:y:2023:i:4:p:493-514

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