LENDING PRACTICES AND FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT COOPERATIVES IN KERICHO COUNTY
Abstract
The primary aim of this research was to assess how lending practices impact the financial performance of SACCOs in Kericho County. A descriptive cross-sectional research design was deemed appropriate for this study, with a target population of 345 employees from seven different SACCOs in Kericho County. The Yamen (1967) formula was employed to determine the sample size, and stratified random sampling was used to select participants. Self-administered questionnaires were utilized to collect primary data on the independent variables, while secondary data on the dependent variable was gathered through a data collection sheet. The study’s findings revealed that, Know Your Customer (KYC) procedures emerged as the most significant, followed by SACCO interest rates, loan security, and collaboration with credit reference bureaus. KYC procedures were particularly noteworthy due to their high level of significance (p-value). The study’s conclusion highlighted the essential role of KYC principles in risk management and the prevention of money laundering within the industry. Furthermore, the study concluded that factors such as profitability, credit term, lending rates, and loan portfolio management significantly contributed to the financial performance of SACCOs. Regarding loan security, the research found that it impacted financial sustainability, profitability, financial efficiency, productivity, and portfolio quality. In the context of credit reference bureau procedures, the study noted that while many respondents were aware of these procedures, there was a lack of understanding regarding their chronological application. The researcher recommended that, to support the application of KYC principles, adequate technology and information systems be implemented to monitor customer transactions based on their individual profiles. For SACCO interest rates, it was suggested that SACCO management should enhance profitability strategies to consistently achieve their interest rate goals. Regarding credit reference bureau policies, the researcher recommended raising awareness among SACCO clients about these policies and their importance in accessing credit facilities, ensuring adherence at all times.
Key Words: Know Your Customer Procedures, SACCO Interest Rates, Loan Security, Credit Reference Bureaus
CITATION: Modi, B. O., & Makori, D. (2023). Lending practices and financial performance of savings and credit cooperatives in Kericho County. The Strategic Journal of Business & Change Management, 11 (1), 232 – 254. http://dx.doi.org/10.61426/sjbcm.v11i1.2849
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i1.2849
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