EFFECT OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES LENDING POLICIES AND RISK-TAKING PROPENSITY ON MICRO AND SMALL ENTERPRISES PERFORMANCE IN TANZANIA

Abstract

This study investigated the Savings and Credit Co-operative Societies (SACCOS) lending policies, risk-taking propensity and the performance of Micro and Small Enterprises (MSEs), which are SACCOS loan beneficiaries in Tanzania. Questionnaires with closed-ended questions were used in a survey of 547 respondents to capture the required information. The study employed the quantitative research approach, using Analysis of Moments Structures to test the existing relationships among the variables. Findings from the study established the existence of a moderating effect of risk-taking propensity between SACCOS lending policies and MSEs’ performance. On the basis of the study findings, it is recommended that risk-taking behaviour be inculcated in society through parenting and educational programmes in a bid to have successful entrepreneurs capable of spearheading growth in SACCOS and businesses. Moreover, thorough knowledge of risk-taking propensity is an important aspect among managers of SACCOS before they advance loans to MSEs. Furthermore, there is a need to conduct research to explore the moderating effect phenomenon found in the current study whereas in the majority of the prior studies the relationship had a strong independent effect.