Credit Risk Management and Loan Portfolio Performance among Deposit Taking Savings and Credit Co-Operative Societies in Nairobi City, Kenya
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Date
2018
Authors
Amunabi, E. K
Koori, J
Journal Title
Journal ISSN
Volume Title
Publisher
Strategic Journal of Business \& Change Management
Abstract
The SACCO sector in Kenya has been of great importance since it help in growth of economy of the country
and also realizing vision 2030. Kenya SACCO industry contributes towards growth of GDP of our Nation as well
as creation of Job opportunities for the youth. There had been a tremendous decrease of total loans to total
deposit in Kenya industry since 2014 to 2016 based on the recent SASRA report. The percentage of total loans
to total deposit in 2014 was 110 percent, 2015 recorded 108 percent and 2016 indicated further decrease to
107 percent. The trend raised the question why such a decrease in the Kenya industry and what can be done
to reverse the situation. Credit risk has been the dominating challenge across all sectors more so in the
financial industry globally. The most underlying challenge across all SACCOs is loan repayment defaults. The
purpose of this project was to examine how credit appraisal methods relate with loan portfolio performance
among deposit taking SACCOs in Nairobi City County, Kenya. The general objective was broken down to
specific objectives; To determine the effect of credit appraisal methods on loan portfolio performance among
deposit taking SACCOs in Nairobi City, Kenya, to evaluate the effect of Credit risk identification practices on
loan portfolio performance among deposit taking SACCOs in Nairobi City, Kenya, to determine the effect of
credit policies on loan portfolio performance among deposit taking SACCOs in Nairobi City, Kenya and to
examine credit risk mitigation measures on loan portfolio performance employed by deposit taking SACCOs in
Nairobi City, Kenya. The study was of great to the management of SACCOs, Government in formulation of
policies and other researchers. Descriptive research design was adopted with a target population of 51
registered SACCOs in Nairobi, Kenya according to the list of SACCO Societies which had been duly licensed to
carry out deposit- taking SACCO business in Kenya. A sample size of 45 respondents was selected using the
systematic random sampling technique. Research data was achieved by use of questionnaires which was
summarized, edited accordingly and analyzed by use of SPSS. 86.7% of the respondents indicate that their
SACCOs had adopted credit appraisal technique.
Description
Article
Keywords
credit appraisal, Credit risk, credit policies, credit risk, SACCOs
Citation
Amunabi, E. K., & Koori, J. (2018). Credit Risk Management and Loan Portfolio Performance among Deposit Taking Savings and Credit Cooperative Societies in Nairobi City, Kenya. Strategic Journal of Business & Change Management, 5(2), 2489-2502.