EFFECT OF CREDIT RISK MANAGEMENT ON FINANCIAL PERFOMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETY IN KENYA

SAMMY KIRUI KIPNGETICH

Abstract


In Kenya, SACCOS remain the most important players in provision of financial services and have deeper and extensive outreach than any other type of financial institute. They provide savings, credit and insurance services to a large portion of the population. SACCOs have contributed to a large extent to the continuous economic development in Kenya, by offering financial services to the poor and small scale businesses However, the growth of SACCOs has been inhibited by several challenges relating to effective credit risk management strategies. This study focused in assessing the effect of credit risk management on the financial performance of SACCOs with specific reference to SACCOs in Bomet County. The dependent variable was financial performance of the SACCOs while the independent variables were comprised of Capital adequacy and Management efficiency. The sample size for SACCOs in Bomet County that were selected to participate in the study was 18. The study employed purposive sampling technique in identifying the SACOOs. Secondary data was used for the purpose of this study and this data was derived from the financial statements of the SACCOs. All the predictor variables (CAR, and ME) had positive relationship with financial performance. the  CAR coefficient of the predictor variables was significant at 5% level of significance except for ME. The findings confirm that there is a statistically significant influence of CAR on financial performance of SACCOs.

 

Key Words:  Credit Risk Management, Financial Performance, SACCOs


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