Legal Environment and SACCOS Financial Performance in Mbeya, Tanzania: Mediated by Corporate Governance

The study was conducted in the Mbeya region of Tanzania, analyzing how corporate governance and the legal environment affected the financial performance of Savings and Credit Cooperative Societies (SACCOS), with a focus on the mediating role of corporate governance.A quantitative survey utilizing a census of 83 active SACCOS collected primary data via structured questionnaires.The study reveals that corporate governance has a substantial and positive direct effect on the financial performance of SACCOS (β = 0.966, p < 0.001).Moreover, the legal environment has a strong positive influence on corporate governance itself (β = 0.977, p < 0.001).Remarkably, the direct link between the legal environment and financial performance is negative and significant (β = -0.098,p = 0.027).Nevertheless, corporate governance fully mediates the relationship between the legal environment and financial performance, resulting in a strong positive indirect effect of the legal environment on performance (β = 0.944, p < 0.001).This study underscores the critical importance of robust corporate governance for financial viability of SACCOs, particularly in challenging legal environments.Policy makers and SACCOS management should prioritize strengthening governance frameworks to enhance financial performance and mitigate legislative challenges in Tanzania and all other Sub-Saharan African nations, where the literature mentions such challenges.This study empirically enriches institutional theory by providing evidence of these relationships within African SACCOS, offering valuable theoretical and practical insights.