Onafowokan Onabanjo Oluyombo
Department of Financial Studies, Redeemer’s University, Ogun State, Nigeria

Year: July 2013
Volume: 23 No. 1
Pages: 53-65


The study assesses the role played by cooperative societies’ loans services on members’ economic condition through household income generation in rural areas where there is no bank or other formal financial providers. Using a questionnaire technique, 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. Data are analysed using chi-square, t-test, ANOVA, and effect size. The study found that participation in a cooperative is associated with increase in household income, while membership duration, house ownership, and marital status are the three variables that contributed significantly to the increase in household income reported by members in addition to the program loan. The result indicates specifically that being a cooperative member for a longer period of time and living in rented houses were significant contributory factors towards increase in household income. However, there was no difference in the number of increase in household income reported based on marital status of the members. The use of cooperative loan increases household income level of the borrowers because the loan serves as additional investment and therefore helps to improve economic position for better living standard of the members. The increase in household income through cooperative loan is a financial capital which supports the social capital theory to explain the role of cooperatives in rural
finance at the household level.