Abstract:
The purpose of this study is to examine the relationship between financial
leverage and financial performance of Savings and Credit Cooperative Societies
in Tanzania (SACCOS). The study used a panel data set of 115 SACCOS in
Tanzania in the period 2011–14 and fixed-effects models for analysis. The study
considered the direct relationship between financial leverage and financial
performance and the moderating effect of board meetings on the relationship
between financial leverage and the SACCOS’s financial performance. The results
show that financial leverage is negatively and significantly related to SACCOS
financial performance. Also, board meetings have the significant and positive
moderating effect on the financial leverage–financial performance relationship.
Finally, the study suggests that SACCOS in Tanzania need to embrace more on
mobilising internal funds from their members instead of relying on debt. This can
reduce the dependence on debt which has been one of the operational costs’
drivers of the SACCOS in Tanzania.
