Integrated Financial Management Information System (IFMIS) and Credit Scoring in Cooperative Societies: A Survey of Deposit Taking Saccos in Nyeri County, Kenya
Wangari, J. K.
Jagongo, A. O.
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Financial management information systems are not a new phenomenon. On the contrary, the recording of financial information is the oldest known form of record keeping, dating back thousands of years. Yet financial information has long presented problems, particularly since the invention of money. Governments in developing countries are increasingly exploring methods and systems to modernize and improve public financial management. In Kenya, majority of SACCOs are faced by several obstacles in their managerial systems due to poor implementation of Integrated Financial Information Systems (IFIS) in their institutions. From recent studies, it is revealed that most of the SACCOs in Nyeri County including their branches are using traditional and old way in doing daily banking activities and also most of their systems and computers are old and without advanced software and new computer applications. The purpose of the study was to determine the effect of integrated financial management information system on credit scoring among SACCOS in Nyeri. The study adopted a descriptive survey research. The population for this study comprised 30 respondents who included the manager and the head of IT department in each of the 15 deposit taking SACCOs in Nyeri County. Since the population is not large, the study adopted a census approach by including all the 30 respondents in the sample. Data involved primary data and secondary data which were collected by use of questionnaires that were self-administered. Data were analyzed using descriptive analysis by use of Statistical Package for Social Sciences (SPSS V 21.0). In addition, multiple regressions were used to measure the strength of the relationship between the dependent and independent variables. Frequency tables and graphs were used to present the data for easy comparison. This study found that internal control mechanism facilitated by IFMIS affects credit scoring among SACCOs in Nyeri to a great extent. The study further found that organizational structure and resources affect credit scoring among SACCOs in Nyeri to a great extent. From the findings, the study concludes that internal control mechanism facilitated by IFMIS affects credit scoring among SACCOs in Nyeri. The study also concludes that information processing, information gathering, timeliness of information, verification of the accuracy and completeness of transactions and transparency of information affect the credit scoring among SACCOs in Nyeri County. The study further concludes that formalization, centralization, hierarchical arrangement of lines of authority and number of hierarchical levels affect the credit scoring of SACCOs in Nyeri. The study recommends that the SACCOs should ensure that the information flow is transparent and effective. This will help enhance confidence and credibility of the operations of the SACCOs. Also the SACCOs will be able to monitor the information of clients and avoid falling into bad debts. The study also recommends that SACCOs should ensure they put in place a proper strategy-structure alignment. This is because changes in the competitive environment require adjustments to the organizational structure. In addition, the SACCOs should realize that laxity in the realignment has a negative impact on financial performance.