DETERMINANTS OF FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN SIAYA COUNTY, KENYA
Abstract
This study sought to examine the effect of capitalization, core capital, dividend policy and loan security policy on financial performance of SACCOs in Siaya County, Kenya. The study was based on Liquidity theory, Signaling dividend theory and risk aversion theory. The study adopted explanatory design and targeted 153 management staff of 24 registered SACCOs located in Siaya County from where a sample size of 111 was calculated and respondents were selected using stratified random sampling technique. Structured questionnaires were used to collect primary data. Both descriptive and inferential statistics were computed by Statistical Package of Social Scientists version 24. Analyzed data was presented in form of tables. From a total of 111 questionnaires that were dispatched for data collection, 95 questionnaires were returned when completely filled, representing a response rate of 85.6% which was good for generalizability of the research findings to a wider population. Both descriptive and inferential analysis showed that all independent variables (capitalization, core capital, dividend policy and loan security policy) significantly influenced financial performance of SACCOs in Siaya County. The study concluded that first, loan security is a viable measure in ensuring loan repayment and reduction in loan delinquency ratio which then boosts financial performance of Saccos; and two, core capital management significantly influences financial performance of Saccos by ensuring Saccos adhere to core capital requirements as regulated by SASRA. The study recommended that one; SACCOs should formulate feasible loan security policies that limit loan delinquency ratios while at the same time attracting new customers so as to boost saccos’ share capital, two; Saccos should adhere to core capital management requirements as stipulated by SASRA so as to avoid liquidation risks and three; Saccos should enact feasible dividend policies that guarantee consistent dividend payouts and reinvestments so as to attract new and retain old customers.
Key Words: Capitalization, Core Capital, Dividend Policy, Loan Security Policy, SACCOs
CITATION: Nyonje, D. A., Malenya, A., & Otinga, H. N. (2019). Determinants of financial performance of Savings and Credit Co-operative societies in Siaya County, Kenya. The Strategic Journal of Business & Change Management, 6 (4), 650 – 666
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DOI: http://dx.doi.org/10.61426/sjbcm.v6i4.1414
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