Strategic Objectives and Financial Performance of Deposit Taking Savings and Credit Co-Operative Societies in Nairobi City County, Kenya
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Date
2018-11
Authors
Faith, Mbula Ngui
Journal Title
Journal ISSN
Volume Title
Publisher
Kenyatta University
Abstract
Savings and Credit Cooperative Societies play a significant role in financial
intermediation and are a key predictor of welfare development within the society.
They translate to 48.55% of the gross national savings. Industry report indicates that
Deposit Taking Savings and credit cooperative Societies (DT-SACCOs) membership
growth stood at 3.6 million people in 2016 from 3.1 million in 2015. The gross loans
during the year 2016 rose to Kshs 297.6 Billion from Kshs 258.18 Billion recorded in
2015. The total savings and deposits on the other hand increased to Kshs 272.56
Billion in 2016 from Kshs 237.44 Billion registered in the previous year. However the
performance of the DT-SACCOs has been under immense threat from other financial
institutions such as banks and microfinance institutions.Inspite of this empirical
research examining the effect of the strategic objectives adopted by DT-SACCOs on
their performance is minimal. The current study bridges the gap by investigating the
influence of strategic objectives on the financial performance of DT-SACCOs in
Nairobi City County, Kenya. The study specifically sought to determine the influence
of; adoption of ICT systems, employee competency, marketing activities and effective
leadership on their financial performance. The study further examined the moderating
effect of capital adequacy requirements on the relationship between strategic
objectives and financial performance of DT-SACCOs. The research was grounded on
the dynamic capabilities theory, the agency theory, the resource-based view theory
and efficient structure theory. The target population for the study comprised 47 DTSACCOs
in Nairobi City County. The study employed a descriptive research design.
Since the population is not large, the study adopted a census approach of all the 47
Finance Managers of DT-SACCOs in Nairobi City County. The research utilized
primary and secondary method in the data collection process. The research utilized a
semi-structured questionnaires that were self-administered and SASRA supervision
reports. To enhance the internal consistency and validity of the research data, the
study conducted a pilot study of 10 DT-SACCOs in Machakos County. The data
collected was sorted, coded and input into the Statistical Package Social Sciences
(SPSS V 23) for subsequent data analysis. The data was analyzed using descriptive
and inferential statistics (multiple linear regression model).Data collected was
presented using tables and figures.The study found that ICT system adoption,
employee competence, marketing activities, effective leadership and capital adequacy
requirement were significantly influencing financial performance of Deposit Taking
SACCOs in Nairobi City County, Kenya.The study concluded that SACCOs benefited
largely from the imposed capital adequacy regulations as it improves public
confidence, provides safety for members‟ deposits, availability of operating capital
and increases lending capacity thus improving the financial performance. The study
further concluded there was a strong relationship between the study variables. The
study recommended that DT-SACCOs to embrace the use of information technology
in their operations by developing websites to market its products so as to boost
customer base and financial.To continue strengthening DT-SACCOs in kenya, the
study recommended that DT-SACCOs should maintain the adequate capital
requirements.The study also recommended that the regulator to keep f periodic
monitoring to ensure SACCOs adhere to laid down regulations.
Description
A Research Project Submitted To the School Of Business in Partial Fulfillment of the Requirements for the Award of the Degree of Master of Business Administration
(Finance Option) of Kenyatta University