Determinants of linkage banking between savings and credit cooperative societies (SACCOS) and formal financial institutions in Tanzania
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Date
2013
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Publisher
University of Dar es Salaam
Abstract
This research studied linkage banking between Savings and Credit Cooperative Societies (SACCOS) and formal financial institutions in Tanzania to identify its determinants. The study applied a combined methodological strategy (qualitative and quantitative) and involved exploratory, survey and case study stages which were undertaken sequentially. The results show that linkage banking practices undertaken in the country fall in the direct and facilitative categories, formal financial institutions’ motives for financial linkages are profit generation and mobilization of savings while SACCOS’ motives are attracting more members, meeting members’ credit needs and mobilization of savings. SACCOS networks were found to be playing a limited role in linkage banking even though they were identified as one of its contributory factors. The networks are impacted by low outreach, funding, financial intermediation and limited use of ICT which reduce linkages within the networks. Findings also show that linkage banking contracts are important in facilitating linkage banking if they contain a clause on capacity building. The study concluded that linkage banking in the country is determined by a combination of financial linkage motives, SACCOS management capacity and level of savings, types of linkage banking practices, transaction costs, profit generation, donor support, ability of SACCOS networks to meet liquidity requirements of their members and trust among members. The implication of the study on policy makers is to review the cooperative policy and legislation to put emphasis on management capacity levels in SACCOS and financial intermediation within the networks. Formal financial institutions should concentrate on facilitative financial linkages.
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Available in print copy
Keywords
Credit Unions, Banks and banking, Financial institutions, Tanzania
Citation
Kaleshu, J.T.(2013). Determinants of linkage banking between savings and credit cooperative societies (SACCOS) and formal financial institutions in Tanzania. Doctoral disseration, university of Dar es Salaam. Available at (http://41.86.178.3/internetserver3.1.2/detail.aspx)