Financial Risks and Shareholders Wealth of Deposit Taking Saccos in Nairobi City County, Kenya
| dc.contributor.author | Njoroge, Wanjiru Stella | |
| dc.date.accessioned | 2025-04-03T06:14:48Z | |
| dc.date.available | 2025-04-03T06:14:48Z | |
| dc.date.issued | 2024-11 | |
| dc.description | A Thesis Submitted to the School of Business, Economics and Tourism in Partial Fulfillment for the Award of Masters Degree of Science in Finance of Kenyatta University, November 2024 Supervisors: 1.Wamugo Lucy Mwangi. 2.Njaramba Jennifer Gathoni. | |
| dc.description.abstract | Shareholder's expectation is to increase wealth from their investments. Since 2010, DT-SACCOs in Kenya have been reporting dismal financial performance, impacting their capacity to consistently meet shareholder expectations. Data from the Sacco Societies Regulatory Authority (SASRA) reveals that the total Economic Value Added (EVA) of DT-SACCOs in Nairobi City County Kenya declined from a negative 362 million in 2011 to a staggering negative 3.9 billion by year 2021, indicating a significant erosion of shareholder wealth. This study aimed to investigate the effect of financial risks on the wealth of shareholders of DT-SACCOs in Nairobi City County, Kenya focusing on capital, credit, and liquidity risks. Additionally, it examined the moderating influence of SACCO asset size on the relationship between financial risk and shareholder wealth. The research employed an explanatory research design, grounded in positivism, targeting 43 DT-SACCOs in Nairobi, Kenya. The study utilized panel data from 2011 to 2021, sourced from SASRA and SACCO reports. Theoretical frameworks explored included stewardship theory, capital adequacy buffer theory, modern portfolio theory, and shiftability liquidity theory. Data analysis involved correlation and panel regression techniques, with diagnostic tests including normality, autocorrelation, homoscedasticity, stationarity, and multicollinearity. Results indicated that capital risk had a positive and significant effect on shareholders' wealth of DT-SACCOs in Nairobi City County. Credit risk was found to have no significant effect on shareholder wealth. Liquidity risk demonstrated a negative and significant effect on shareholder wealth. Firm size estimate exhibited a statistically significant moderating effect on the interaction between financial risk variables and shareholders' wealth. Based on these findings, the study recommends that DT-SACCOs implement effective capital risk management practices, including optimizing risk-return balance and diversifying capital sources. To address liquidity risk and enhance shareholder wealth, SACCOs should develop comprehensive liquidity risk management policies, closely monitor liquidity adequacy ratios and cash flow projections, and diversify funding sources. Furthermore, regulators should consider implementing regulations based on Saccos asset base to account for the moderating effect of firm size on financial risk management and shareholder wealth creation. | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/29899 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Financial Risks and Shareholders Wealth of Deposit Taking Saccos in Nairobi City County, Kenya | |
| dc.type | Thesis |