The role of cooperative societies in rural finance: Evidence from Ogun State, Nigeria

The study assess the roles played by cooperative societies’ savings and loans services on members’ economic condition, standard of living and in meeting participants financial needs in rural locations where there is no bank nor other formal financial providers. Using a combination of interview, focus group discussion and questionnaire techniques, the study covers the activities of cooperative societies located in rural communities and villages outside the state capital and local government headquarters where there is no electricity, water and tarred road in Ogun State, Nigeria. From its findings, this study identified and discussed potential areas for the improvement of cooperative societies that could be of benefit to rural finance providers and the cooperative members. The study is the first empirical investigation in Nigeria that focuses on the relevance of cooperative societies on members’ standard of living in rural communities and villages. The study shed light on how rural communities function – how their relationships develop, how individual esteem is increased, how interdependence grows, how hierarchies are maintained – and how this is facilitated in part by the loan-making of members promoted cooperatives. It has also provided more evidence on the importance of land ownership, and how this is enhanced when rural communities have access to cheap and affordable loans. It has also provided insights into the development of rural businesses, how complex they are, and how they require more input than the financing received through cooperative loans. The study breaks new ground in informal cooperative functioning, community development and rural finance research by providing a distinction between standard of living and quality of life variables in measuring the economic condition of rural dwellers, and the production of circle of social capital theory that the role of cooperatives to the members involve financial capital, physical capital and social capital which are interrelated. This helps to appropriately identify the roles of cooperative societies in rural finance to increase in household income, ownership of household assets and acquisition of enterprise assets. However, participation in the cooperative does not lead to enterprise profitability, while rural financial needs are more accessible from cooperatives than other sources

Bank Governance, Asset Quality, and Risk. Do Macro-Prudential Policy and Macroeconomic Factors Matter? Evidence from Nigeria’s Banking Sector

Purpose: This study examines the nexus between bank governance, asset quality, and banking risk measured by the distance to default (DTD) and their interactions with prudential policy and macroeconomic factors.   Theoretical framework: This study uses the Resource Based View (RBV) lens to examine how banks use their unique resources, asset, competencies, and governance framework to mitigate the adverse impact of risks and navigate regulatory policies and macroeconomic variables. The RBV provides context on banks’ unique resources to optimise their long-term objectives in a complex economic landscape.   Design/Methodology/Approach: The study analyses panel data from 12 listed banks on the Nigeria Stock Exchanges (NGX) from 2008 to 2021. This study tests autocorrelation, heteroskedasticity, and cross-sectional dependence to validate the study’s analysis. Based on various diagnostic tests, the Feasible Generalised Least Squares (FGLS) are suitable for hypothesis testing.   Findings: The findings revealed that bank governance interaction with asset quality has a negative and insignificant impact on bank risk. And liquidity, interest rate, inflation and gross domestic product are significant determinants of banking risk.   Research, practical & social implications: Maintaining effective bank risk management requires adherence by all stakeholders to macro-prudential policies by monetary policymakers and macroeconomic factors from the fiscal policymakers.   Originality/Value: This study empirically examines bank governance, asset quality, and banking risk in a developing country, incorporates macro-prudential policies and macroeconomic factors, and uses the DTD metric for risk assessment rarely used in related studies in developing countries