The main objective of this study was to examine whether operating performancesrnof rural saving and credit cooperatives are under the influence of capital structure inlinernwith loans growth, and to test if threshold relationship exists in these cooperatives of thernAmhara, Oromia, SNNP and tigray regions. A panel data of92 rural saving and creditrncooperatives from 2004 to 2007 was used and threshold regression analysis modelrndeveloped by Hansen (J 999) applied. Further, this study reviews the saving and loanrnoutreach as well as financial performance of rural saving and credit cooperatives usingrnProtection, Effective financial structure, Asset quality, Rates of return and cost, Liquidityrnand Signs of growth(PEARLS) monitoring system software that developed by worldrncredit cooperative union.rnThe empirical findings depict that capital structures significantly influence ruralrnsaving and credit cooperatives. The threshold variables (net worth to loan ratio) haverntwo values 0.11 and O. 01. When the threshold value is between these figures, every unit ofrngrowth in loans increases operating performance by 0.10 times, which is not satisfactory.rnThe empirical findings also show that the growth in loans for the rural saving and creditrnLoan outreach performance varies by region, While Oroma comprises 53%of the rural saving and credit cooperatives, Amhara dominates with small number of savers (14%) but with larege number of borrowers (30%),In general, the number of savers to borrowers in Amhara is 3:1, in Tigray 3.2:1, in SNNP 4:1 and in Oromia 23:1.rnMoreover, the empirical findings of financial performance of rural saving and creditrncooperatives using monitoring system software shows that all rural saving and creditrncooperatives in the country are not practicing loan loss protection and even solvency isrn50% less than the standard