Internal Control System and Loan Performance of Deposit Taking Saccos in Nairobi City County, Kenya
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Date
2024-04
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Kenyatta University
Abstract
The so-called DT-SACCOs has proven to directly donate to social-economic threats arising from poverty, augmented job chances and economic upscaling. Even with such an amazing provision, they still have trials on their future survival due to loan default rates over the years. The main objective of this study was to establish the influence of internal control system on loan performance of deposit taking savings and cooperative societies in Nairobi City County, Kenya. Specifically, the study evaluated the influence of control activities on loan performance of deposit taking savings and cooperative societies in Nairobi City County, Kenya; examined the influence of control environment on loan performance of deposit taking savings and cooperative societies in Nairobi City County, Kenya, established the influence of information communication on loan performance of deposit taking savings and cooperative societies in Nairobi City County, Kenya and assessed the influence of monitoring on loan performance of deposit taking savings and cooperative societies in Nairobi City County, Kenya. Systems theory, agency theory, information asymmetry theory and credit risk theory are the key suppositions which were utilized in this study. The study utilized causal research design for the purposes of developing the research problem. A total of 42 DT-SACCOs representing the study population located in Nairobi City County. To collect the needed data, survey approach was utilized for the population was small. Structured questionnaire was the main tool which was utilized for collecting primary data from top officials of the DT-SACCOs. To collect the secondary data, a data collection schedule was utilized. The research findings were reported using chart and tables. Ethical issues were addressed as supposedly through the respective permissions. Before testing of hypotheses, diagnostic test was performed which entailed normality test, multicollinearity test and heteroscedasticity test Research findings portrayed that the four COSO affiliated ICS predictor variables, namely; control activities, control environment, ICT and monitoring activities had a direct and statistically significant influence on loan performance of DT-SACCOs in Nairobi City County, Kenya. Top management will benefit from the research findings for the consideration of the contextual aspects of ICS which are relevant and suitable to DT-SACCOs aid in development of information decision system which is well-informed for future planning on the ways in which loan default rate may be mitigated. The government policy makers such as SASRA will take advantage of the outcome of this investigation for the conceptual viewpoint addressed herein pinpoints areas of loan lending policy making to create user-friendly financing environment for the borrowers and lenders. The academicians have a reliable empirical anchorage for the linkage between ICS and loan performance the contextual viewpoint provide an avenue to advance on this topical issue in the future.
Description
A Research Project Submitted to the School of Business, Economics and Tourism in Partial Fulfillment of the Requirement for the Award of the Degree of Master of Business Administration (Finance Option) of Kenyatta University, April, 2024