Identification of the major indicators of economical and financial performance assessment in rural credit cooperatives of the State of Minas Gerais through the factor analysis method

Abstract

In this study, we sought to propose a most parsimonious model of economical and financial analysis, which can be used to assist managers in taking decisions, considering the major indices resulting from Analysis of Financial Demonstrations for the years 2010 and 2011. We used the Exploratory Factor Analysis for a set of 44 rural credit cooperatives of the State of Minas Gerais. The methodology consisted in quantitative and exploratory analysis, and were also used secondary data obtained at the Cooperativa Central de Crédito de Minas Gerais. The literature review describes the importance of the rural credit cooperative model in the agricultural economy and then, in the national economy. The Exploratory Factor Analysis was carried out with 17 indices and those which did not contribute significantly for the model were removed. Ten indices and three retained factors remained after the analysis, namely, capital and risk, profitability and cost-effectiveness, and solvency and liquidity. These factors are responsible for explaining around 88.68% of the total variance. Therefore, the model proposed here allowed the ranking of organizations and, consequently, by using it, decision makers can seek for the root cause of problems or analyse and standardize those actions which redounded in successful performance.