Saving and Credit Deduction Remittance on Financial Performance of Mentor Deposit Taking Saving and Credit Co-Operative in Murang`A County, Kenya
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Date
2023
Authors
Mumbe, Matei
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
The research assessed the effects of saving and credit deductions remittance and financial
performance of Mentor deposit taking SACCO in Murang`a County, Kenya. Savings and
credit cooperatives are organizations created by its members to pool resources for
economic growth. SACCOs offer their members manageable loans and reward them with
dividends on their deposits. Since the loanable funds are members’ contribution, the
SACCO operation may be impacted by the non-remittance of the monthly contributions.
Determining the impact of saving, loan repayment, interest income, share capital, and the
risk premium on the financial performance of the SACCOs was the study's specific goal.
Institutional theory, credit risk theory, cash flow management theory, loan pricing theory,
and cash flow management theory support research variables since they show how each
variable behaves. The inconsistency in the number of deposit taking Saccos renewing
their licenses, growth in dormant members to up to13.08% in 2019 and report by sasra in
2019 indicating more Ksh. 5 Billion were unremitted to various Saccos by the employers
as the main problem which warrant a study. The study adopted the cross sectional
research design since it doesn’t require testing of hypothesis and data is collected at a
given point of time and data collected can focus on one or more variables. Three branches
of Mentor SACCO, located across Murang'a County, were used for the research. A
systematic sampling design was used to create a sample size of 391 from 18000 sacco
members. Data collection was done using both open and enclosed questionnaires, and
only 89% of questionnaires were completed and compiled for analysis, and a document
review guide was used in collecting longitudinal secondary data on financial performance
from the audited financial statement provided by the SACCO chief executive officer. To
test the validity, the Cronbach’s Alpha test was carried out on 10% of the sample; the
results showed 0.9, an indication that tools were excellent for data collection and Valid at
a P<5% significance level for the test of validity. The financial ratios, Pearson
correlation, and multiple regression were used to determine the performance and
relationship between independent and dependent variables statistically, where it was
noted that non-remittance of loans had a negative impact on the financial performance
shown by a 25% of loans were not remitted in time thus the SACCO did not attain
efficiency ratio of 100% as required by SASRA, and in the last five years under study the
SACCO had not attained a current ratio of 2:1 as recommended, the asset growth was
recommendable for the five years of study, grew from 69.37% to 76.025%. The study
helps the sacco managers to finds a safer means of remittance and vet employers, a
further study on sacco size and financial performance can be carried out . The data was
presented in tables and figures. Since the information provided would not be shared with
a third party, the respondents were offered the assurance of anonymity and secrecy.
Description
A Research Project Submitted to the School Of Business, Economics & Tourism for Award Of Master Of Business Administration Degree (Finance); Kenyatta University
Keywords
Saving and Credit Deduction, Financial Performance, Mentor Deposit, Saving and Credit Co-Operative, Murang`A County, Kenya