Loan Management Strategies and Financial Sustainability of Co-Operative Societies in Nigeria

This study examined the effect of loan management strategies on the financial sustainability of co-operative societies in Nigeria. The research specifically investigated two core operational dimensions of loan management such as credit appraisal strategies and credit monitoring practices as independent variables against financial sustainability as dependent variable. Using a survey approach, structured questionnaires were administered to a sample of board trustees comprising presidents, managers, secretaries, and treasurers who steer the administrative and financial governance of these grassroots financial institutions. Out of the distributed instruments, data from 278 respondents drawn from 100 randomly selected co-operative societies were successfully retrieved and deemed fit for analysis. The collected data were processed using descriptive statistics, Pearson product-moment correlation, and ordinary least squares analysis. Empirical results revealed that loan management strategies exercise highly significant combined and individual influence on institutional financial sustainability. Specifically, the regression models revealed that pre-disbursement credit appraisal systems exert a strong, positive, and statistically significant effect on financial sustainability (beta = 0.551), (p = 0.000), accounting for the highest individual variance at (25.8%). On the other hand, postdisbursement credit monitoring practices similarly demonstrated a significant positive influence (beta = 0.457), (p = 0.000), explaining (20.6%) of structural variance. Based on the findings, the study recommends the formal institutionalization of independent credit evaluation committees to mitigate nepotism, and the deployment of digital credit risk screening tools to curb adverse selection. Furthermore, management boards must enforce post-disbursement fund audits and formalize quarterly physical inspections to address moral hazard. To resolve prolonged delinquencies, co-operatives must strictly execute constitutional by-laws regarding direct legal sanctions and collateral liquidation.