EFFECT OF FINANCIAL STRATEGIES ON FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT COOPERATIVE SOCIETIES: A CASE STUDY OF SACCOS IN MOMBASA COUNTY
Abstract
This study evaluated the effect of financial management strategies on financial performance of savings and credit cooperative societies in Mombasa County. The study covered four specific objectives including determining the effect of capital structure management on financial performance; to assess the effect of investment diversification on financial performance; to establish the effect of liquidity management on financial performance; and to find out the effect of credit risk management on financial performance of savings and credit cooperative societies in Mombasa County. The study was anchored on trade-off theory, modern portfolio theory, anticipated income theory, information asymmetry theory and balanced scorecard theory. The study adopted correlational research design and sample 98 out of 130 target population using systematic random sampling. The study collected secondary data from the audited financial statements of the sampled savings and credit cooperative societies for the period 2015-2019. Data was analyzed using both descriptive (mean and standard deviation) and inferential (product moment correlation and linear regression) statistics with the help of statistical package for social sciences, Version 23.0. Inferences were drawn at the level of significance of 0.05. The study findings revealed that SACCOs ensure that cash flow is well managed offer discounts to early loan repayments. The study established that SACCOs monitor their accounts receivables on weekly and monthly basis and monitor its loan levels at a set threshold. The study concluded that there is a significant relationship between financing strategies and financial performance of the SACCO. Interest rates should be reviewed frequently depending on the prevailing market rates. The researcher recommended that the management should enhance marketing to increase the number of members hence increasing the capital base of the SACCO.
Key Words: Capital Structure Management, Investment Diversification, Liquidity Management, Credit Risk Management
CITATION: Maganga, F. S., & Wekesa, M. W. (2021). Effect of financial strategies on financial performance of Savings and Credit Cooperative Societies: A Case Study of SACCOs in Mombasa County. The Strategic Journal of Business & Change Management, 8 (4), 342 – 357.
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DOI: http://dx.doi.org/10.61426/sjbcm.v8i4.2110
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