EFFECT OF MANAGEMENT EFFICIENCY ON CREDIT RISK IN DEPOSIT TAKING SACCOS IN KENYA
Abstract
This Study examined how management efficiency affects the credit risk profile of deposit taking SACCOs in Kenya. Management efficiency is the capacity of an organization to leverage its capabilities to achieve the strategic goals and objectives as efficiently and effectively as possible. On the other hand, Credit risk is the probability that counterparty will fail to meet its obligations in accordance with agreed terms. Management efficiency is postulated by the level of earning assets to Total assets while Credit risk is postulated by the level of Non-performing loans to Total assets. A Causal research design was adopted upon a panel of all deposit taking SACCOs in the period 2011-2014. The dependent variable is represented by a change in credit risk, while Management efficiency is represented by quality of Management efficiency. Descriptive and Regression analysis were used to establish the relationship between the variables. The study found out that Management efficiency as measured in terms of earning assets to Total assets has a negative and statistically significant effect on the level of Credit risk of Deposit taking SACCOs in Kenya.
Key Words: SACCO-Savings and Credit Cooperative Organization, SASRA-SACCO Society Regulatory Authority, Credit risk, Management Efficiency, Earning Asset
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DOI: http://dx.doi.org/10.61426/sjbcm.v3i2.276
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