Journal of Economics and Behavioral Studies (ISSN: 2220-6140) Vol. 15, No. 3, pp. 55-69, September 2023 55 Liquidity Management and Financial Performance of SACCOs in Bushenyi District *Benjamin Musiita 1 , Ben Boyi 2 , Thomas Kisaalita 2 , Wycliffee Mutungi 3 & Robert Mbabazize 4 1 Department of Economics & Entrepreneurship, Mbarara University of Science and Technology, Uganda 2 Makerere University Business school, Uganda 3 Kigarama farmers’ SACCO, Uganda 4 Bank of Uganda *bmusiita@must.ac.ug, bboyi@mubs.ac.ug, tkisaalita@mubs.ac.ug, wycliffeemutungi@gmail.com, mbabazize@gmail.com Abstract: The main objective of this paper is to examine the association between elements of liquidity management and the financial performance of SACCOs in Bushenyi District. This research was conducted through a cross-sectional survey involving a sample of 72 Savings and Credit Cooperative Societies (SACCOs) located in the Bushenyi District. A sample of 61 SACCOs operating in Bushenyi was determined using Krejcie and Morgan's Table, with accountants, managers, and credit officers serving as the units of analysis, resulting in a total population of 183 respondents. The research instrument's validity was assessed using the content validity index, and its reliability was evaluated through Cronbach's alpha coefficient, a measure of the consistency in obtaining similar results from the same respondents when administering the instrument at different times. In accordance with the research objectives, inferential statistics, specifically correlation and regression analyses, were conducted. The findings reveal a statistically significant positive correlation between cash ratios, liquidity ratios and financial performance. Lastly, the research outcomes demonstrate a statistically significant positive relationship between the comprehensive liquidity management elements and financial performance. This suggests that any favorable change in the management of liquidity within SACCOs is associated with a positive change in financial performance. Therefore, enhancing liquidity management can aid in maximizing the use of cash on hand, while efficient cash budgeting can guarantee good planning and resource allocation. Due to their weakly positive associations with liquidity management, debtor management, as well as bank reconciliation statements, must also be considered; this will improve the financial performance of SACCOs. Keywords: Liquidity management, financial performance, SACCOS, Bushenyi district. 1. Introduction The central focus of concern for business practitioners across diverse organizational types, including Savings and Credit Cooperatives (SACCOs), has undeniably revolved around financial performance due to its profound implications on the overall well-being and, ultimately, the longevity of these entities (Mmari & Thinyane, 2019). Within the realm of micro-financing institutions, Savings and Credit Cooperative Societies (SACCOs) assume a pivotal role in the mobilization of financial resources earmarked for various developmental endeavors (Mumanyi, 2014). The fundamental mission of SACCOs resides in facilitating the empowerment of their members by means of aggregating savings and disbursing credit (Ofei, 2001). In essence, the overarching objective underpinning the establishment of SACCOs is to propagate savings while concurrently furnishing the capacity to extend loans at interest rates that undercut those levied by alternative financial service providers to their constituent members. To bolster the expansion and sustainability of SACCOs within the Ugandan landscape, the government introduced initiatives such as the Project for Financial Inclusion in Rural Areas (PROFIRA) and the Uganda Cooperative Alliance (UCA) (Muriithi, 2014). However, these efforts have left a lot to be desired as the financial performance of SACCOs across the country remains a great challenge (Flosbach, 2015; UCA Annual Report, 2016). A similar scenario appears to exist in other Eastern African nations. For instance, Ondieki et al. (2017) noted that SACCOS in Kenya encountered a multitude of challenges, including issues such as deficient record-keeping, a high illiteracy rate among their members, loan backlogs, insufficient capital, and outstanding audit fees. In Tanzania, SACCOs also grapple with challenges such as inadequate management, a lack of operational capital, instances of embezzlement, elevated loan delinquency rates, and subpar business performance (Mwakajumulo, 2011; Maghimbi, 2010). The existing body of literature highlights that persistent subpar financial performance within SACCOs may be attributed to suboptimal liquidity management practices (Mvula, 2013; Flosbach, 2015). Researchers such as