Capital Structure and Financial Performance of Savings and Credit Cooperative Organizations in Uganda: Evidence from the Rwenzori Region
DOI:
https://doi.org/10.47941/ijf.3879Keywords:
Capital Structure, Financial Performance, Savings and Credit Cooperative Organizations (SACCOs), Uganda, Rwenzori RegionAbstract
Purpose: This study examined the effect of capital structure on the financial performance of Savings and Credit Cooperative Organizations (SACCOs) in the Rwenzori Region of Uganda, with firm size assessed as a moderating variable. Drawing on the Trade-Off Theory, the study investigated whether capital structure significantly influences SACCO financial performance and whether firm size strengthens this relationship.
Methodology: The study adopted a quantitative correlational research design and utilized secondary data obtained from audited financial statements and financial reports of 110 SACCOs operating within the Rwenzori Region. Data were analyzed using descriptive statistics, Pearson correlation analysis, and hierarchical multiple regression analysis.
Findings: The findings revealed a significant positive relationship between capital structure and financial performance (r = .449, p < .01). Regression results further indicated that capital structure significantly predicts financial performance, accounting for approximately 20% of the observed variation. Firm size was also found to have a significant positive effect on financial performance and to moderate the relationship between capital structure and financial performance. The interaction effect demonstrated that the positive influence of capital structure on financial performance becomes stronger as firm size increases.
Unique Contribution to Theory, Policy and Practice: The study contributes to the capital structure literature by extending the application of the Trade-Off Theory to SACCOs within a developing-country context. The findings underscore the importance of maintaining an appropriate balance between debt and equity financing while simultaneously pursuing institutional growth strategies. The study recommends that SACCO managers adopt prudent financing policies, strengthen capitalization, and enhance asset growth to improve financial sustainability and performance.
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Copyright (c) 2026 Ruyonga Charles, Aliija Ronald, Dr. Rwakihembo John, Akugizibwe Moses
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