The role of working capital management of urban primary consumer cooperative societies in managing price volatility in Ethiopia

Abstract

This study examines the role of working capital management in managing price volatility in urban primary consumer cooperative societies in Ethiopia. It analyzes the impact cash management, receivables management, inventory management and payables management on price volatility management. Data were collected through a survey questionnaire from 114 chairpersons and vice-chairpersons of 57 urban primary consumer cooperatives operating in Bahir Dar, Adama and Addis Ababa cities achieving a response rate of 81.58%. Target urban primary consumer cooperatives were selected using a two-stage cluster sampling method. Structural Equation Model (SEM) analysis was employed to assess the relationships. The findings reveal that cash, receivables and payables management do not have statistically significant impacts on managing price volatility. However, inventory management demonstrates a statistically significant positive impact. The study concludes that urban primary consumer cooperatives should prioritize inventory management as a strategic tool for stabilizing prices while other working capital components serve broader financial management purposes.

Key words: primary consumer cooperative; working capital management; price volatility; SEM