Sacco Societies Regulatory Authority Prudential Standards and Performance of Deposit-Taking Saccos in Nairobi City County, Kenya
Ocholla, Okumu David
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Despite the operation of SASRA regulations for almost a decade, the impact of compliance of the DT-SACCOs to these conventions on their performance has not been fully recognized as some of the approved SACCOs have had their certificates revoked owing to poor performance and other SACCOs put under statutory management which this research seeks to find out. The overall objective of the study was to identify the effect of SASRA prudential standards on the performance of DT-SACCOs in Kenya with specific objectives being: to examine the effect of minimum capital adequacy requirements on the performance of DT-SACCOs in Kenya, to examine the effect of minimum assets and assets quality requirements on the performance of DT-SACCOs in Kenya, to examine the effect of minimum liquidity requirements on the performance of DT-SACCOs in Kenya and to establish the relationship between prudential standards and the performance of DT-SACCOs in Kenya. The study applied agency theory in understanding the factors affecting the performance of SACCOs. A cross sectional analysis and descriptive research design based on primary and secondary data was employed. The collection of primary data was done using structured questionnaires whereas SASRA supervision reports and audited SACCO financial statements gave the secondary data. The collected data was analysed using SPSS version and presented in both descriptive and inferential statistics. The research employed construct validity and instrument’s reliability, where the latter was calculated using Cronbach’s Coefficient Alpha for either uneven or even items grounded in the order of number arrangement of the questionnaires. Various diagnostic tests counting on normality test, multicollinearity test, and auto-correlational test were carried out to evaluate the relevance of regression model. The findings of the research confirmed that the prudential standards of SARSA have significantly influenced the performance of the SACCOs both in terms of the regulatory standards instituted for membership and their sustainability. A considerable number of SACCOs also demonstrated improvement in how they performed concerning general efficiency, loan cycle, portfolio, and membership. As much as these improvements were linked with diverse factors ranging from quick recoveries, high demands, and not limited to increased membership, the growth could be easily attributed to SASRA regulatory framework. Another finding which is worth mentioning is that the majority of the SACCOs complied with the regulating authority to avoid being locked out of the business by the operator. The study recommended that the SACCO managers needed to design measures to enable them increase their levels of income to meet the current liquidity requirements. It also suggested that the regulatory body needed to conduct an in-depth survey that would look into the effect of their regulations on the SACCO industry to ascertain that their obligations as a regulatory body are adhered to.