INFLUENCE OF LOAN MANAGEMENT TECHNIQUES ON FINANCIAL PERFORMANCE OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN BUNGOMA COUNTY, KENYA
Abstract
The Deposit Taking Sacco Societies (DTSs) are an integral part of the larger Sacco sub sector in Kenya which is majorly concerned with Deposit Taking and Non- Deposit Taking Sacco Societies. Besides taking deposits, they also issue loans to their members where the deposits act as collateral. Different DTSs have been adopting different strategies to manage loans such as interest rates, loan follow ups, customer credit information sharing and loan appraisal .This study sought to determine the influence of selected loan management techniques on financial performance of DTSs in Bungoma County, Kenya. The study was guided by the following theories; expectation theory, liquidity preference theory and the modern portfolio theory. The study adopted survey research design that targeted all the three DTSs operating in Bungoma County according to SASRA report (2018); Ng’arisha Sacco Society Ltd, Stawisha Sacco Society and Mwalimu national Sacco Society ltd. Sixty three respondents consisting of Chief Executive Officers, Credit Managers, Finance Managers, Internal auditors, credit officers and Loan field Officers were targeted. Since the target population was small, census sampling was adopted. Questionnaires were utilized to gather primary data. Data was analyzed using descriptive statistics (mean, standard deviation and percentages). Multiple regression model was used to determine the influence of loan management techniques on financial performance of DTS in Bungoma County. The findings revealed that loan management techniques have a positive influence on financial performance of DTSs in Bungoma County. Therefore, loan management techniques such as interest rates, loan follow-ups, sharing customer credit information and loan appraisal are likely to improve the financial performance of DTSs in Bungoma County. The study recommended that DTSs should develop policies that guide the loan follow up strategy. This is to ensure the strategies were consistent and formal. DTSs should enhance their credit monitoring techniques including the use of modern information technology to determine the location of defaulters and how to reach them with ease
Key Words: Loan Follow-Ups, Loan Appraisal, Credit Information Sharing, Interest Rate
CITATION: Okwemba, R. W. K., & Malenya, A. (2020). Influence of loan management techniques on financial performance of Deposit Taking Savings and Credit Cooperative Societies in Bungoma County, Kenya. The Strategic Journal of Business & Change Management, 7(3), 930 – 947.
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DOI: http://dx.doi.org/10.61426/sjbcm.v7i3.1717
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