FACTORS LEADING TO INCREASED BORROWING FROM COMMERCIAL BANKS BY MEMBERS OF MWALIMU SAVINGS AND CREDIT CO-OPERATIVE SOCIETY OF MERU NORTH DISTRICT

Charles Kimathi

Abstract


Saccos core business is mobilizing savings from members, and then providing them with credit at affordable interest rates. However, owing to the high level of liquidity in the country, Saccos have received stiff competition from commercial banks, which are awash with loanable funds and are giving out loans without asking for any savings. As a result of this, many Sacco members have moved to borrow from the commercial banks rather than their Sacco societies. If this trend continues unchecked, the Sacco societies might die. Hence, there is a need to find out the factors leading to the increased borrowing from commercial banks by members of Mwalimu Savings and Credit co-operative society.

The researcher's general objective was to determine the factors leading to the shift in borrowing from Sacco societies to the banks. The specific objectives were to; determine why Mwalimu Sacco members opt to borrow from commercial banks, assess the impact of the shift of the borrowing on the future of the society and suggest policy matters to save the societies from possible collapse. The research adopted a descriptive research design.

The population of the study was all the members of Mwalimu Savings and Credit Co-operative Society of Meru North District, which was estimated at 650. The research adopted a purposive sampling design where a sample of 100 was used in collecting primary data while literature reviewed, published financial statements and reports formed the basis of secondary data. The data collected were analyzed by way of tabulation, frequency tables and percentages.

From the study, it was found out that most Sacco members had opted to borrow from commercial banks as compared to the Sacco societies. It was clear that Sacco societies were facing stiff competition from commercial banks and this threatened the life of Sacco societies. Following this findings the researcher thus recommended that Saccos need to revise their lending policies for them to survive in the market.

Key Words: Borrowing, Commercial Banks


Full Text:

PDF

References


Abell P. (1988). Establishing Support Systems For Industrial Co-operatives: Case Studies From the Third World. Avebury Publishers.

Berry A, Faulkner S. (1993). Bank lending. Beyond the Theory. Alden, Oxford.

David A.M. (1965). Canadian Co-operative Digest. Vol. 8. No. 4.

David H.R (1970). Factors Affecting Success and Failure in Farmers’ Co-operative Association. Journal of Agricultural Economics. Vol. XXI.

E.A.P.H (1982). The work of Co-operatives. East African Publishers.

Egbert D. (1970). Factors Affecting Success and Failures in Farmers Co-operative Association. Journal of Agricultural Economics. Vol XXI.

Goran H. (1973). Efficiency Versus Distribution in East Africa Co-operatives. Nairobi, East Africa literature Bureau.

Government of Kenya (1966). The Republic of Kenya Development Plan 1966-1970.

Government printers, Nairobi.

Government of Kenya (1965). Africa Socialism and its Application to Planning in Kenya. Government Printers, Nairobi.

Government of Kenya (1986). Sessional Paper on Economic Management for Renewed Growth. Nairobi, Government Printers.

Government of Kenya (1987). Co-operative Development Policy for Kenya: Sessional Paper No.14. September.

Governement of Kenya (1977). The Co-operative Societies Act No. 12. Nairobi, Government Printers.

Government of Kenya (1970). Sessional Paper No. 8. Government Printers.

Government of Kenya (1987). Sessional Paper No. 4. Government Printers

Government of Kenya (1987). Sessional Paper No. 6. Government Printers.

Berry A, Faulkner S. (1993). Bank Lending, Beyond the Theory. Alden, Oxford.

Karanja E. (1974). The Development of Co-operative Movement in Kenya. Xerox University Microfilms, U.S.A.

KUSCO (1997) The Co-operative Magazine. From Issue No. 10-41, 1997- 2002. Kenya Union of Savings and Credit Co-operatives Ltd.

Kuria C. (1990) Developing Kenya through Co-operatives. Nairobi K.N.F.C Printing Press .

Kibanga M.M. (2003) The Development of Co-operative Law and Policy in Kenya. First Edition.Nairobi;Oscan print Print.

Lumumba O.M.(1998) An Investigation on the Members Attitude as the Savings and Credit Co-operative Societies in Kenya Mwalimu Saving and Credit Co-operative Society Limited Nairobi. Un published M.B.A. Thesis, Kenyatta University ,Nairobi.

M’itiiri J. (1979). Co-operative Movement. First Edition, KUSCO

M’itiiri J. (1979). A short History of Saving and Credit Co-operatives. First Edition, KUSCO.

M’itiiri J. (1979). Co-operative Movements. First Edition, KUSCO.

M’itiiri J. (1979). What is your Opinion? KUSCO.

Mugenda O., Mugenda J. (1999). Research methodology and Quantitive Aproach. First Edition, Nairobi, Central graphic services

Mureithi E.K. (1986). Mobilization of Personal Savings through SACCOS in Kenya. Report of a Conference, Nairobi, Kenya.

Mwalimu Sacco (2004). A News Letter of Mwalimu Sacco Society Limited. Mwalimu Sacco.

Mwalimu Sacco (2006). A News Letter of Mwalimu Sacco Society Limited. Mwalimu Sacco.

Mwalimu Sacco (2007). A News Letter of Mwalimu Sacco Society Limited. Mwalimu Sacco.

Mwarania K.M., Mutungu T.M. (1986). Savings and Credit Co-operatives in the Development of Kenya’s Economy. Kericho.

Ogola J.J. (1986) The Inadequacies of Co-operative Laws in Promotion and Development of SACCOS in Kenya. Nairobi.

Okoth O.J. (1986) An Autonomous Legal Framework for Co-operative Mobilization of Personal Savings for Development. Nairobi.

Ouma S.J. (1987). Development in Kenya Through Co-operatives. First Edition, Shirikon Publishers.

Wafula J.S (1985). The Contribution of Mwalimu Co-operative Savings and Credit Society to the Welfare of Teachers. Un published P.G.D.E. Project, Kenyatta University, Nairobi.

Widstrand C.G. (1970). Co-operative and Rural Development in East Africa. New York, African publishing corporations.


Refbacks

  • There are currently no refbacks.