FINANCIAL PERFORMANCE AND EFFICIENCY OF SELECTED COOPERATIVES IN MALAYSIA: RATIO AND DATA ENVELOPMENT ANALYSIS APPROACH

Abstract

Cooperatives are organizations that are formed jointly by members to meet their economic needs and interests. The role of cooperatives is to increase the socioeconomic status of the members as well as eliminate poverty problems. Nevertheless, the performance of cooperatives in Malaysia in terms of turnover is still low compared to the other countries. This will be a cause for concern because inadequacies of financial decisions lead to the failure of cooperatives. Hence, this study aims to evaluate the financial performance and efficiency of cooperatives in Malaysia. This study applies Ratio Analysis to evaluate the financial performance of the cooperatives. Data Envelopment Analysis (DEA) was also employed in this study to determine the efficiency scores of cooperatives over the period 2010 to 2017. DEA results obtained that inefficiency of managerial performance leads to the inefficiency of the overall technical efficiency. The study recommends that the management of cooperatives in Malaysia should enhance their managerial performance because pure technical efficiency was found to contribute less to overall technical efficiency.