Corporate Governance and Financial Performance of Deposit-Takingsavings and Credit Cooperative Societies in Kericho County, Kenya

Abstract

Savings and credit cooperatives in Kenya have contribute immensely to the countries’ gross domestic product. Currently, the deposit taking saving ad credit cooperative societies have experienced declining profitability and worsening liquidity problem. Governance is of great importance for financial performance in savings and credit cooperatives. In Africa, Savings and Credit Cooperative Societies have been growing as a strong tool to meet financial needs. This is because cooperatives are well placed to bring about equitable development and justice. However, deposit-taking Savings and Credit Cooperative Societies like any other businesses are faced with challenges in their quest for growth and corporate governance stand as one of the main challenges facing deposit Savings and Credit Cooperative Societies. This study sought to establish the effects of corporate governance on the financial performance of the deposit-taking Savings and credit co-operative societies in Kericho County. The specific objectives were; to establish the effect of the board, Leadership Style, structure and rules and regulations on the financial performance of savings and credit cooperatives in Kericho County. Agency, stewardship and stakeholders and resource dependency theories guided the study. The study employed correlational research design. The target population was the top management (chief executive officer, board members, chief finance managers) of deposit-taking SACCOs in Kericho County where a sample was drawn using stratified sampling and simple random sampling to obtain a sample of 36 respondents. Data was collected spanning from the year 2015 to 2019 where both primary and secondary data were recollected for this study. Primary data was collected by administering questionnaires on a drop and pick basis. Secondary data was collected from the SACCO Societies Regulatory Authority. Data collected was analyzed using the statistical package of social sciences and presented using graphs and tables. The study found out that board composition had a positive and significant effect on the financial performance. Leadership style had a positive and significant effect on the financial performance. Board structure had a positive and significant effect on the financial performance. Rules and regulations had a positive and significant effect on the financial performance. The study would benefit the director of the savings and credit cooperatives and other stakeholders in improving the performance of DT SACCOs to be able to compete globally. The findings would also help the government in policy-making regarding cooperatives.