EFFECT OF REGULATIONS ON FINANCIAL PERFORMANCE IN SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN MOMBASA COUNTY, KENYA
Abstract
This study assessed the effect of regulations on the financial performance of savings and credit cooperative societies in Mombasa County. The specific objectives of the study are to determine the effect of capital adequacy, asset quality, earnings performance and liquidity regulations on financial performance of Saccos. The study is grounded on free cash flow theory, cash management theory and operating cycle theory. The study adopted descriptive survey research design. The study target population was selected Savings and credit cooperative societies in Mombasa County with membership of 20,000 individuals and above. The population was derived from branch managers, financial managers and credit officers. Stratified random sampling technique was used to select a sample size of 73 respondents with the help of Neymars allocation formula. The primary data was collected by use of a structured questionnaire which was developed based on the research objectives. Data analysis was done with the help of Statistical Package for Social Science (SPSS) version 25 tool. Descriptive statistics and inferential statistics formed the data analysis techniques used. Data was presented in frequency tables. Findings revealed that the SACCO total capital reserves are within the stipulated level by SASRA. Further, it was established that aggregate deposits for the SACCO are sufficient and stable and that the SACCOs risk based capital is high thus preventing the SACCO from been undercapitalized. Findings showed that during hard times, our SACCO seeks capital infusion from external sources. The study concluded that for the SACCOs to improve their asset quality, they have invested in financial assets. Further, the study concluded that the SACCO has invested in real asset properties to enhance its asset quality. The SACCO loan asset is of high quality and that the SACCO’s credit policies are integrated with performance objectives and in line with asset quality regulations. The study recommended that the SACCOs loans income should be enhanced as it was revealed to be the most significant income source for the SACCOs and forms the bulk of total income. The study recommended that the management of the SACCOs should seek to improve performance of these SACCOs by ensuring investments interests are maintained above the required average of 5 percent.
Key Words: Capital Adequacy, Asset Quality, Earnings Performance, Liquidity Regulations
CITATION: Nyagichuhi, G. M., & Wekesa, M. W. (2022). Effect of regulations on financial performance in savings and credit cooperative societies in Mombasa County, Kenya. The Strategic Journal of Business & Change Management, 9 (4), 462 - 475.
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DOI: http://dx.doi.org/10.61426/sjbcm.v9i4.2424
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