Credit Administration and Financial Perfomance of Institutional Based Savings and Credit Cooperative Societies Ltd in Nairobi City County, Kenya
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Date
2023
Authors
Masidza, Lydia Saranwa
Journal Title
Journal ISSN
Volume Title
Publisher
kenyatta university
Abstract
This study offers to determine credit administration and financial performance of Institutional-based SACCOs in Nairobi city County, Kenya. In Kenya, Savings and Credit societies have faced challenges and difficulties in achieving better financial performance despite Kenyan economic role. The risk that members will not meet contractual obligations seriously affects the smooth running of the business and thus experiences a downward trend, leading sometimes to their collapse. This study explored the credit administration and financial performance of Institutional based Savings and credit societies in City County Nairobi, Kenya. The study targeted indetermination of effects of loan repayment, credit costs, default management, and management of loan security on SACCOs` financial performance in Nairobi City County. This project tested a significance level of 0.005 null hypotheses. Study adopted Stewardship Theory, Credit Default Theory, Agency Theory, Information asymmetry theory, and 5Cs Credit Model. Explanatory research design was employed. The goal populace of the study compromised of 10 Institutional based SACCOs in Nairobi City County for the years 2017 to 2021. A census of the 10 SACCOs was done. The project used secondary panel from both annual and financial statements reports of numerous selected companies. Panel linear multiple regression analysis, descriptive statistics and correlation analysis were used in the research. This study showed, the loan repayment management affects significantly the financial performance (p=0.000) credit cost management significantly affected financial performance (p=0.000), default management significantly affected financial performance (p=0.000), and last but not least, credit collateral management significantly influenced financial performance (p=0.000). The research recommends that the institutional based SACCOs should enhance the collection policy through adoption of more stringent measures to a more lenient measure of effective debt recovery. The research also advises that the management of Institutional based SACCOs should boost or enhance customers’ appraisal tools to be able to improve their financial performance. With the client appraisal tool, the Institutional-based SACCOs will be able to identify the credit worthy clients hence reducing non- performing loans. The management should also up their credit risks control to help reduce default levels and non-performing loans which will enable improved financial performance.
Description
A Research Project Submitted in Partial Fulfillment of the Requirements for the Award of Degree of Master of Business Administration (Finance Option) of School of Business, Economics, And Tourism, Kenyatta University
Keywords
Credit Administration, Financial Perfomance, Savings and Credit Cooperative Societies, Nairobi City County, Kenya