Effect of Deposit Risk on Financial Performance of Deposit Taking Saccos in Nairobi City County, Kenya
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Date
2023
Authors
Fundi, Nyaga Edwin
Wamugo, Lucy
Journal Title
Journal ISSN
Volume Title
Publisher
(IAJEF
Abstract
An economy is highly reliant on a stable
financial system for it to thrive, with Savings
and Credit Cooperatives forming a critical
component under this system. The existence
and subsequent operations of financial
systems such as Savings and Credit
Cooperatives ensures funds flow between the
savers and borrowers, an aspect that promotes
economic growth and development. The
financial performance of deposit taking
Savings and Credit Cooperatives in Kenya has
been declining over the last 5 years as
indicated by Return on Equity. This study
aimed to establish the effect of liquidity risks
on financial performance of Deposit Taking
Savings and Credit Cooperatives in Nairobi
City County, Kenya. This research was based
on theory of liquidity preference. This
research utilized a causal research design with
the target population being all 45 Deposit
Taking Savings and Credit Cooperatives in
Nairobi City County, hence adopting a census
approach. Secondary data was obtained from
the published financial reports and the Sacco
Societies Regulatory Authority Annual
reports for the five years from 2017 to 2021.
There was the use of descriptive statistics. In
addition, there was also the use of regression
analysis in determining the effect of
dependent variable on the independent
variables. Findings to this study indicated that
deposit risk had a negative and significant
effect on performance of Savings and Credit
Cooperatives. Given this case, the
recommendation was that Savings and Credit
Cooperatives’ management should focus on
putting measures in place that focus on
increasing their deposit balances as a ratio of
the total assets as this
Description
Article
Keywords
Financial performance, Deposit risk, Savings and Credit Cooperatives
Citation
Fundi, N. E., Wamugo, L. (2023). Effect of deposit risk on financial performance of deposit taking saccos in Nairobi City County, Kenya. International Academic Journal of Economics and Finance, 3(9), 453-462.