SASRA CAPITAL ADEQUACY REQUIREMENT AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SACCOS IN KENYA
Abstract
Despite the fact that SASRA regulations have been in operation for almost ten years, the impact of DT-SACCOs' compliance with these regulations on their performance has not been fully agreed upon as shown by inconsistent empirical findings. Some SACCOs that were approved have had their certificates revoked due to poor performance, while others have been placed under statutory management. This research aims to investigate this issue. The study's objective is to examine the impact of capital adequacy requirements on financial performance of deposit taking SACCOs in Kenya. The study was anchored on the theory of economic regulation, the agency theory, stakeholders’ theory and theory of credit management to explain the effect of SASRA regulatory framework on SACCOs' performance. Correlational research design was used. The population of the study was 169 DT-SACCOs registered in Kenya from which 118 was chosen as a sample. Secondary data for the years 2019 to 2021 was obtained from SASRA supervision reports and audited SACCO financial statements. Construct validity and instrument reliability was tested in the study. Cronbach's Coefficient Alpha was used to calculate instrument reliability for both even and uneven items. Diagnostic tests including normality tests, multicollinearity tests, and auto-correlational tests, was conducted to evaluate the relevance of the regression model. The data was analysed using STATA version 16. Results show that capital adequacy requirement has a negative significant effect on financial performance of DT-SACCOs in Kenya (β = -0.146, p=0.015<.05). The study recommends the SACCOs’ management to embrace the right level of capital for the proper functioning of the organizations.
Key words: SASRA Capital Adequacy, SASRA Regulatory Framework, Financial Performance
CITATION: Bett, D., & Nyatete,K. (2024). SASRA capital adequacy requirement and financial performance of deposit taking SACCOs in Kenya. The Strategic Journal of Business & Change Management, 11 (4), 321 – 331. http://dx.doi.Org/10.61426/Sjbcm.v11i4.3084
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DOI: http://dx.doi.org/10.61426/sjbcm.v11i4.3084
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