Risk and its Impact on the Sustainability of Savings and Credit Cooperatives: The Case of Ecuador

The aim of this study is to analyze the impact of Value at Risk (VaR) on the sustainability of the main savings and credit cooperatives (SACCs) in Ecuador during the 2012-2022 period. Through non- probabilistic sampling the four largest SACCs were selected according to asset ranking: Juventud Ecuatoriana Progresista, Policía Nacional, Jardín Azuayo and Cooprogreso. VaR was estimated by historical simulation of the main liability accounts subject to market risk. Panel data econometric models were then applied to relate VaR to financial indicators (ROA, ROE, NPLs, efficiency, solvency), macro variables (inflation, GDP) and governance. The results suggest that ROA and GDP have an inverse relationship with VaR, while ROE, financial ratios and inflation show a direct relationship. Fixed effects models were found to be the most appropriate according to statistical tests. However, most variables were not statistically significant. In conclusion, better asset management and higher economic growth can reduce the risk of SACCs. In contrast, higher levels of default, inflation and governance are associated with higher VaR. The recommendation is that SACCs strengthen their comprehensive risk management and consider macro and governance variables to ensure their long-term financial and social sustainability. Future research could extend the analysis to other relevant accounts.