Browsing by Author "Warukira, Winfred"

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    Liquidity Management and Financial Performance of Deposit-Taking Savings and Credit Cooperative Societies in Nakuru County, Kenya
    (Kenyatta University, 2024-09) Warukira, Winfred
    Savings and credit co-operative societies (SACCOs) are member-based financial institutions that mobilize savings and provide credit to support socio-economic development. Their ability to offer accessible financial services makes them key players in promoting financial inclusion. As SACCOs operations expand, effective liquidity management becomes critical to ensuring financial sustainability. This is particularly important because SACCOs often finance long-term loan requirements using consolidated members’ deposits, a practice that can heighten their exposure to liquidity problems. Liquidity challenges in SACCOs are, to a large extent, as a result of non-payment of loans by members, mismanagement of funds, poor investment choices and inadequate capital. This, in turn, negatively affects the financial performance of SACCOs, as evidenced by the erratic trends in the rates of return among deposit-taking SACOs between 2016 and 2022, that averaged below 7.5%. The unpredictable returns to members impede expansion and competitiveness of DT-SACCOs in the market. The general objective of this research was to find out the effect of liquidity management on financial performance of DT-SACCOs in Nakuru County, Kenya. The specific objectives of the study were to establish the effect of capital adequacy, asset quality, loan repayment and cash management on financial performance of DT-SACCOs in Nakuru County, Kenya. The theories reviewed were Buffer Theory of Capital Adequacy, Modern Portfolio Theory, Anticipated Income Theory and Miller-Orr Cash Management Theory. The study adopted a causal research design. Nakuru County had twenty-two SACCOs licensed to carry out deposit-taking business, which made the target population and a census survey was conducted. Audited financial statements of DT-SACCOs and SACCO Societies Regulatory Authority (SASRA) reports were the source of secondary data and STATA was used for analysis. Descriptive statistics included mean and standard deviation. Inferential statistics involved correlation and panel regression analyses. The investigated results highlighted that capital adequacy and loan repayment had a significant effect on financial performance, whereas asset quality and cash management had insignificant effect on financial performance of DT-SACCOs in Nakuru County, Kenya. It was recommended to review capital adequacy requirements to ensure stability of DT-SACCOs and for SASRA to raise capital requirements for rapidly expanding DT-SACCOs that lack adequate capitalization. To address loan default rates, DT-SACCOs should align repayment plans with borrowers' income cycles, enhance credit assessments, and implement robust loan monitoring. A broader estimation model incorporating more potential determinants is recommended to improve the model prediction and bring more insight into the determinants of financial performance in the SACCO sector.