Credit Risk Management and Loan Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya
| dc.contributor.author | Baariu, Jotham Gitonga | |
| dc.date.accessioned | 2024-08-09T07:17:21Z | |
| dc.date.available | 2024-08-09T07:17:21Z | |
| dc.date.issued | 2024 | |
| dc.description | A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfilment of the Requirements for the Award of Degree of Master of Business Administration (Finance Option) of Kenyatta University, May 2024. Supervisor Charity Njoka | |
| dc.description.abstract | Savings and Credit Cooperative Societies play an important role in providing financial services to many Kenyans. SACCOs have been identified as crucial growth engines in many countries across the world. This was evidenced from the increase in the substandard, doubtful and loss categories of the loan portfolio, which together constitute the Non-Performing Loans (NPLs) portfolio thus an indication that loans were not being serviced in accordance with their contractual obligations. The issue of credit risk has dominated the financial world. The goal of this study was to determine credit risk management and loan performance of deposit-taking SACCOs in Kenya. Specifically, the research assessed the influence of lending requirements, debt recovery processes and credit monitoring on loan performance in Deposit- Taking SACCOs in Kenya. The anchoring theories included portfolio theory, agency theory, credit default theory and loanable fund theory. To examine the connection between credit risk management and loan performance, this study used a causal approach research design with a target population of the study was 11 SACCOs in Meru County selected using purposive sampling. The sample size was the 44 managers form the 11 DT-SACCOs who were involved directly on credit management and were the primary respondents. The study employed primary data acquired from the questionnaires and responses were analyzed using both descriptive and inferential statistics. Findings revealed majority of respondents considered the ability of customers to generate sufficient cash flow, customer's collateral, borrower's moral character and borrower's credit history before granting a loan. Result showed that revealed a strong and positive relationship between the lending requirement and loan performance. Further, the findings revealed fines for late payments were mostly known by customers, sale of the properties of the customer in the case of loan default, use of legal means in loan collection and debt collection policies greatly helped in efficient credit management. The regression analysis's findings also demonstrated a strong and positive correlation between loan performance and the loan recovery procedure. The majority of respondents, according to descriptive data, thoroughly investigated applicants' creditworthiness, regularly verified clients' credit status, and followed internal policies to guarantee on-time loan repayments. The regression study demonstrated a strong and favorable correlation between credit monitoring and loan performance. The study concluded that lending requirements, loan recovery processes, credit monitoring, and loan performance were positively and significantly correlated. The study recommends DT-SACCOs should have a credit risk management policy which guarantees loan repayment, accurate estimation of loan defaults and suitable mitigation measures. The study further recommends regular credit risk monitoring of loan portfolio and use the services of a credit reporting agency to determine the creditworthiness of borrowers to minimize default rates. | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/28628 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Credit Risk Management and Loan Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya |