INFLUENCE OF LOAN PORTFOLIO, CORE CAPITAL AND DIVIDEND POLICY ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN VIHIGA COUNTY, KENYA
Abstract
This study sought to examine the effect of loan portfolio, core capital and dividend policy on financial performance of SACCOs in Vihiga County, Kenya. The study adopted explanatory design and targeted 132 senior management staff of registered SACCOs located in Vihiga County. Both descriptive and inferential statistics were computed by Statistical Package of Social Scientists (SPSS) version 24. From the values of unstandardized regression coefficients with standard errors in parenthesis, all the independent variables (loan portfolio; β = 0.314 (0.065) at p<0.01; dividend policy; β = 0.269(0.065) at p<0.01; and core capital; β = 0.325(0.063) at p<0.01 were significant predictors of SACCO performance (dependent variable). Secondary data from selected SACCOs also confirmed that effective financial management practices led to growth in assets base, profits and membership base. The study concluded that there is a positive and significant effect of loan portfolio on financial performance of SACCOs in Vihiga County, Kenya; implying that SACCOs that adopt effective loan portfolio management practices can really have a positive impact on their financial performance;. Secondly, effective formulation and application of dividend policies in SACCOs can lead to improvement in financial performance of SACCOs in Vihiga County SACCOs’ and; core capital yields a positive increase in financial performance of SACCOs. The study recommended that; one; SACCOs should craft and implement effective loan portfolio management practices so as to boost their financial performance; and engage in effective formulation; secondly, application of dividend policies so as to realize positive improvements in SACCO’s overall performance and finally SACCOs should adhere to core capital requirement and craft capital mobilization strategies which can fund SACCO’s core activities that can have a significant bearing on SACCO’s overall performance.
Key Words: Loan Portfolio, Dividend Policy, Core Capital, SACCO Performance
CITATION: Anaya, H. K., & Otinga, H. N. (2019). Influence of loan portfolio, core capital and dividend policy on financial performance of savings and credit co-operative societies in Vihiga County, Kenya. The Strategic Journal of Business & Change Management, 6 (1), 347 – 366.
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i1.1062
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