Evaluation of the capital structure of the cooperative societies of savings and loans of Mexico

Abstract

The aim of this work is to determine whether or not the Cooperative Savings and Loan Societies of Mexico (SOCAPS) obey the theory of financial hierarchy, how they make their financing decisions and what are the possible consequences of this. To this end, a hypothetical model was proposed, based on the theory of financial hierarchy and taking into account the restrictions that SOCAPS have; this model was compared with the financing decisions of a sample of 34 Cooperative Savings and Loan Societies of Mexico, through the interpretation of the standardized betas obtained with the multiple regression analysis. Thus, eleven different financing criteria were found in the SOCAPS, of which one obeys the hierarchical theory. Likewise, it was found that the main source of financing for SOCAPS is internal funds, followed by bank loans and loans from other organizations. With this, it was concluded that the financing criteria of the analyzed entities protects them from many risks, such as excess leverage, but, at the same time, they limit their growth possibilities.