Financial Management Practices and Financial Performance of Deposit Taking Saccos in Nairobi City County, Kenya.
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Date
2023
Authors
Kyenze, Amos Kitua
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The nperformance nof ndeposit ntaking nsaving nand ncredit ncooperative nsocieties is very crucial given its importance in any given economy. However, thenfinancial nperformance nof deposit taking nSaccos nhas been naffected nby various financial management npractices nwhich this study explored. nThis research sought to advance knowledge in examining the neffects nof financial nmanagement practices non nfinancial nperformance nof nndeposit taking nSaccos in Nairobi City County, nKenya. nThe specific objectives nof nthe nstudy consisted of the assessment of the effect of fixed asset management, loan portfolio management, cash asset management and financial investment nmanagement non nthe nperformance nof ndeposit ntaking nSaccos. The study also included a moderating variable, Deposit taking-Saccos size, to examine its moderating effect non nthe nrelationship nbetween financial management practices and nfinancial nperformance nof n Deposit taking-Saccos nin nNairobi City County, nKenya. The financial performance measure used were nReturn non nAssets which was regressed against the financial management practices including fixed asset management, loan portfolio management, cash asset management and financial investment management. The study was anchored on three main theories which include liquidity preference theory, modern portfolio theory and Pecking order theory. It also used the census method to select 41 deposit taking Saccos, which represented 70% nof the DTS that have their headquarters nin nNairobi CitynCounty and their branches are spread across the other 46 counties in Kenya. The study also adopted a longitudinal type of data for the period 2015 to 2019. The secondary ndata was sourced nfrom nthe naudited nfinancial statements nof nthe registered DTS nin nNairobi City nCounty and supervision annual reports. The research employed a causal nresearch ndesign where the data nwas analyzed, presented an interpreted based on study objectives. The results of the study revealed that fixed asset, loan portfolio, ncash asset and financial investment management practices were positive and significantly correlated to nfinancial nperformance nof n Deposit taking -nSaccos nin nNairobi nCity nCounty. nIn naddition, the results nalso nindicated nthat financial ninvestment nmanagement npractices had a more positive and significant neffect on nfinancial nperformance, followed by loan portfolio management practices, then cash asset management practices and lastly fixed asset management practices. The moderating variable sacco size was found to nhave na nmoderating neffect non nthe nrelationship nbetween financial management practices nand nfinancial nperformance nof n Deposit taking -nSaccos nin nNairobi nCity nCounty. The study concluded that fixed asset management practices, loan portfolio management practices, cash asset management practices, financial investment management practices had a positive and significant effect on the financial performance of Deposit taking -Saccos in Nairobi City County. Therefore, nthe nstudy recommended nthat the management of Deposit taking -Saccos should consistently ensure they prepare cash budgets and maintaining a cash book so as to be able to manage their cashflows especially from the account receivables and account payables. They should also implement effective financial investment management practices that can help them reduce the risk of financial losses from investments such as projects or securities.The study findings may also help policymakers in Deposit taking -Saccos such as the Sacco Society Regulation Authority to enforce better loan portfolio management policies that encourage their customers to purchase loans and reduce cases of loan defaulting and nnon-nperforming nloans nwhich have a significant nimpact non performance.
Description
A Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirements for the Award of Degree of Masters in Business Administration (Finance Option) of Kenyatta University, May, 2023
Keywords
Financial Management Practices, Financial Performance, Deposit Taking Saccos, Nairobi City County, Kenya