The influence of risks of liquidity and credit in the process of conversion of credit cooperative in rural credit cooperative of free admission: a case study
DOI:
https://doi.org/10.11606/rco.v2i4.34725Keywords:
credit union, conversion process, free admission, risksAbstract
The objective of this paper is to analyze the impacts of the conversion process of an agricultural credit union in a free admission credit union, to identify the liquidity and credit risks, and their influence in the cooperative financial sustainability. Qualitative and quantitative approaches are used in a case study of the Alfha credit union. Qualitative analysis was elaborated by financial document analysis and semi-structured interviews. In quantitative analysis financial ratios were used among the periods of June, 2004 and June, 2007. The results indicated that the cooperative did not have pay attention to the risk management. The conversion process implicated in increasing the cooperative risk because of the elevation in credit demand due the new credit takers that joint to the cooperative. In the conversion subsequent periods, the unbalance of the operational limit was observed. So, the cooperative committed the available financial resources to accomplish with their obligations, due to the increase in the credit operation values more than the increase in the capitation values. Finally, the conversion process demands an efficient credit concession politics and risk analyzes to guarantee the institution financial sustainability.Downloads
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