PRUDENTIAL SASRA REGULATORY STANDARDS AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SACCOS IN NYANZA REGION, KENYA
Abstract
SACCOs that complied with SASRA’s capital adequacy requirements demonstrated improved financial stability and profitability, indicating that a strong capital base enhances members' confidence and operational sustainability. Findings revealed that adherence to liquidity regulations positively influenced SACCOs' financial performance. SACCOs with adequate liquidity were better positioned to meet short-term obligations, reduce financial distress, and take advantage of investment opportunities. The study established that asset quality had a great influence on financial performance. SACCOs with good asset quality, depicted by lower levels of non-performing loans (NPLS), exhibited stronger financial outcomes. This justifies the importance of effective credit management and monitoring practices. The results indicated a strong link between risk management practices and financial performance. SACCOs that had effective risk identification, assessment, and mitigation mechanisms recorded higher financial performance. Risk-aware institutions were better prepared to navigate financial uncertainties and maintain operational efficiency. SACCOs should ensure strict compliance with SASRA’s capital adequacy requirements to enhance their financial stability and resilience. SACCOs should adopt robust liquidity management strategies to meet both short-term obligations and regulatory requirements. Investment in tools and systems that monitor and forecast liquidity needs is recommended to avoid operational disruptions. SACCOs should strengthen their credit risk assessment frameworks, enhance due diligence processes, and develop effective loan recovery strategies. SACCOs should embed comprehensive risk management frameworks within their operations. SASRA should enhance support mechanisms, such as training and sensitization workshops, to help SACCOs comply effectively with prudential guidelines. Regulatory frameworks should also be periodically reviewed and updated to reflect the dynamic financial environment and unique SACCO sector challenges.
Key Words: Capital Adequacy, Liquidity, Asset Quality, Risk Management, Risk Mitigation Mechanisms
CITATION: Obala, A. N., Miroga, J.,& Nambuswa, E. (2025). Prudential sasra regulatory standards and financial performance of deposit taking sACCOs in Nyanza Region, Kenya. The Strategic Journal of Business & Change Management, 12 (2), 757 – 772. http://dx.doi.org/10.61426/sjbcm.v12i2.3240
Full Text:
PDFReferences
Blumberg, B., Cooper, D. R., & Schindler, P. S. (2014). Business research methods (4th ed.). McGraw-Hill Education.
Donaldson, L., & Davis, J. H. (1989). CEO governance and shareholder returns: Agency theory or stewardship theory. Academy of Management Review, 20(1), 65–91.
Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20(1), 65–91.
Freeman, R. E. (1984). Strategic management: A stakeholder approach. Pitman.
Gichuki, M. (2013). The role of SACCOs in financial inclusion in Kenya. Nairobi: KUSCCO.
Mutinda, M. (2016). Effect of prudential regulations on the financial performance of SACCOs in Kenya. Unpublished Thesis, University of Nairobi.
Wanyama, F. O. (2009). Surviving liberalization: The cooperative movement in Kenya. ILO Cooperative Facility for Africa.
DOI: http://dx.doi.org/10.61426/sjbcm.v12i2.3240
Refbacks
- There are currently no refbacks.
This work is licensed under a Creative Commons Attribution 3.0 License.
PAST ISSUES:
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.