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

Full Text:



Abuja, R., (2005). Research Methods, New Delhi, Rawat Publications.

Asiedu-Mante, E. (2002). “Silver Jubilee Celebration of the Rural Banking in Ghana”, The Rural Banker, January – June, 2002

Basel. (1999). Principles for the Management of Credit Risk. Basel Committee on Banking Supervision, Basel

Bystrom, H. (2007). Structured microfinance. Lund University in Lund, Sweden: Swiss printers

Central Bank of Kenya, (2010). Risk Management Survey for the Banking Sector. CBK, Nairobi.Chijoriga, M. M. (1997). Application of Credit Scoring and Financial Distress Prediction Models to Commercial Banks Lending: The Case of Tanzania. Ph.D Dissertation, Wirts Chaftsnnversitat Wien (WU), Vienna.

Cooper, D. R., and Schindler, P. S. (2006) ‘Business Research Methods’, (1st ed.). Berkshire: McGraw Hill.

CorForeman, D.I. (2009). Nonparametric Statistics for Non-Statisticians: A step-by-Step.

Creswell, J (2009). Research Design: Qualitative, quantitative, and Mixed Methods Approaches. Los Angeles, CA: Sage

Creswell,W.J. (2005). Qualitative inquiry and research design: choosing among five approaches (2nd ed.). California: Sage Publications.

Crosbie et al,(2003) Journal of Planktonic Research , plankt.oxfordjournals.org/content

Dornyei, K., (2007), Observation and interviewing. Qualitative research in action. Vol 8 (12) pg 112-125

Eldelshain, D. (2005) British Corporate Currency exposure and Foreign Exchange risk Management, London Business School. London PhD Thesis

Gaitho.M (2010).Credit risk management practices by SACCOs in Nairobi. Unpublished MBA project.

Gasbarro, D., Sadguna I. M., & Zumwalt J. K. (2002). The Changing Relationship between CAMEL Ratings and Bank Soundness during the Indonesian Banking

Gisemba, P. N. (2010). The Relationship between Credit Risk Management Practices and Financial Performance of SACCOs in Kenya. Unpublished MBA Dissertation, University of Nairobi

Kish, H., (2005). The Structuring of Organizations.A Synthesis of the Research. New Jersey, Prentice Hall .

Kombo . D. K and Tromp D.L.A , (2006). Proposal and Thesis Writing, Paulines publications

Kotler M. A (2001) Research Methodology, Wileys Publications

Lokesh-Koul, D. (2004). Research Methods in the Social Sciences. New York: St. Martin's Press.

Long staff, P., Schwartz, E. (1995) “A simple approach to valuing risky fixed and floating rate debt” Journal of Finance, Vol.5pp789-819

Markowitz H.M (1952), Portfolio Selection. Journal of Finance, Vol 7 no1.

McDaniel L., (2001). Theoretical Perspectives, Design Research and the PhD Thesis. Staffordshire, UK: Staffordshire University Press.

Michael, Sproul. (1998). The Quantity Theory Versus the Real Bills Doctrine in Colonial America. In Economics Working Papers.

Mugenda, O. M., & Mugenda, A. G. (2003).Research Methods: Quantitative &Qualitative Approaches. Nairobi: Acts Press

Mugenda.O and Mugenda A. (2012). Research methods: Quantitative and Qualitative approaches.

Nielsen J (2002), Credit Unions in Europe, www.sysbio.se/Nielsen/documents/

Nelson, C., Mknelly, B., Stack, K. & Yanovitch, L. (1994): “Village Banking. The State of the Practice.”Small Enterprise Education and Promotion Network. USA: United Nations Development Fund for Women.

Njeru Warue (2012). Factors affecting loan delinquency in microfinance institutions in Kenya. International Journal of Management Sciences and Business Research, Vol. 1, Issue 12.

Olomola, S. (2000) Determinants of small holder loan repayment, performance, Evidence, Nigerian Microfinance system, Nigeria. Retrieved from www.csae.ox.ac.uk/conferences, on 21 July, 2013

Owusu K.D (2008) “Credit management policies in rural banks in Accra Ghana”

Petersen and Rajan (1997) Trade Credit Theories and Evidence http://www.nber.org/papers/w5602.pdf

Reilly, F. K. and Brown, K. C. (2011).Investment Analysis and Portfolio Management. Australia: South-Western.

Richardson, D.C (2002) PEARLS Monitoring system World Council information center.Maddison, WI, WOCCU Toolkit series NO.4

Robinson, A., (2002). Business Research Methods, (3rd ed.). New York: Oxford University Press.

SASRA (2001) Summary of SASRA Required Reports: Retrieved fromhttp://www.sasra.go.ke

Silikhe.S (2008) “Credit risk management in Microfinance Institutions in Kenya” Unpublished MBA Project.www.fsdkenya.com

Trochim, C., and William, N., (2002). Social Research Methods, (4rd ed.). New York: Oxford University Press.


  • There are currently no refbacks.