Empirical Analysis of the Moderating Role of Trust on Cooperative Financial Performance in Rivers State

Trust between members, and between members and management, is theorised as a critical social infrastructure that reduces transaction costs, facilitates commitment of savings, and improves loan recovery in cooperative societies. This study empirically analysed the moderating role of trust on the relationship between governance quality and financial performance in cooperative societies in Rivers State, South South Nigeria. A quantitative survey design was employed, with 260 cooperative members from forty cooperatives in Port Harcourt, Obio-Akpor, and Ikwerre LGAs completing validated questionnaires. Trust was measured across member-to-member and member-to-management dimensions using an adapted cooperative trust scale. Governance quality and financial performance were measured using established instruments from the cooperative management literature. Hierarchical multiple regression with interaction terms was used to test the moderating hypotheses. Results confirmed that trust significantly moderated the governance-financial performance relationship (interaction term beta = 0.29; p < 0.01). The governance quality-performance association was significantly stronger in high-trust cooperatives (beta = 0.63 versus 0.41 in low-trust cooperatives). Trust also had a significant direct effect on financial performance independent of governance quality (beta = 0.38; p < 0.001). Member-to-management trust showed a stronger direct performance effect than member-to-member trust. The study makes an original empirical contribution by establishing trust as a performance moderator in Rivers State cooperative societies and recommends transparency-building practices as trust investment strategies for cooperative management teams. Keywords: trust, cooperative governance, financial performance, moderating effect, Rivers State