Empirical Investigation of the Effect of Cooperative Size on Loan Performance in Agricultural Cooperatives in Benue State

The relationship between cooperative size, measured by membership and capital base, and loan portfolio performance is theoretically ambiguous, as larger cooperatives may benefit from diversification while smaller ones may exercise stronger peer-monitoring of borrowers. This study empirically investigated the effect of cooperative size on loan performance in agricultural cooperative societies in Benue State, North Central Nigeria. A quantitative panel study design was adopted, using three years of financial and operational data (2021 to 2023) from forty agricultural cooperatives stratified by membership size into small (below 50 members), medium (50 to 200), and large (above 200 members) categories. Loan performance was measured through non-performing loan ratio, recovery rate, and average loan-to-income ratio for the cooperative portfolios. Fixed-effects panel regression was employed. Results showed a non-linear relationship between cooperative size and loan performance. Medium-sized cooperatives showed the best loan recovery rates (mean 84.3 percent), significantly outperforming both small (72.1 percent; p < 0.01) and large (76.8 percent; p < 0.05) cooperatives. The non-performing loan ratio was highest for large cooperatives (18.7 percent), attributed to weakened peer-monitoring at scale. Social capital density moderated the size-performance relationship, reducing loan defaults at all size categories. The study fills an empirical gap in cooperative size-performance analysis for the Nigerian agricultural context and recommends an optimal cooperative scale policy guiding state cooperative departments when advising on merger or subdivision decisions. Keywords: cooperative size, loan performance, agricultural cooperatives, Benue State, panel data analysis