Corporate Governance Practices and Performance of Cooperative Financial Institutions

Abstract

This study examined the relationship between corporate governance practices and performance of cooperative financial institutions. The study was conducted in Kilimanjaro region. Specifically, it examined whether the cooperative financial institutions conform to corporate governance practices and establish relationship between the corporate governance practices and the performance of cooperative financial institutions. The study employed explanatory research design. Sample size was seventy respondents; however response were from sixty five respondents. Both primary and secondary data were collected. Primary data were collected through questionnaires and interview and secondary through documentary review. Data were analyzed using descriptive statistics and correlation analysis to determine relationship between corporate governance and performance of cooperative financial institution. Findings revealed that more than fifty percent of SACCOs were found to comply less with corporate governance practices. The practices tested were education level of board members, board size, internal control and internal audit, reporting and disclosure and board composition in terms of skills furthermore corporate governance and performance were found to be positively correlated. The weak corporate governance has lead to fraud and low membership in SACCOS. The study recommends that SACCOS should regularly organize business management skills training for the board members to enhance their understanding of SACCO's operations. This will improve the level of supervision and monitoring in the SACCOS.