The Link between Capital Adequacy and Financial Stability: Evidence from Deposit Taking Savings and Credit Co-Operative Societiesin Kenya
| dc.contributor.author | Birisi, Hesborn Birisi | |
| dc.contributor.author | Omagwa, Job | |
| dc.contributor.author | Musau, Salome | |
| dc.date.accessioned | 2025-04-15T06:55:45Z | |
| dc.date.available | 2025-04-15T06:55:45Z | |
| dc.date.issued | 2024-04 | |
| dc.description | Full Article | |
| dc.description.abstract | n Kenya, financial stability ofDeposit Taking(DT) Savings and Credit Cooperative Societies (SACCOs)as evident in non-performing loansofDT SACCOShas been an issue of concern over the past few yearsdue to evidence indication fluctuating trends. Consequently, should this continue then this sector’s contribution to financial intermediation through provision of financial services will be negatively affected.Though DT SACCOshave sought to enhance their capital adequacy, its effect on enhancement of financial stability remains an issue for further empirical investigation.In view this, the study sought to investigate the effect of capital adequacy on financial stability of DT SACCOSin Kenya. The study was anchored on agency theory. Positivist research philosophy was adoptedin this study. The study adoptedexplanatory research design. The target population for the study comprised160 DT SACCOs which were fully operational in the period. A census approach was used for the study. This study utilized quantitative secondary data which was obtained from the society’s financial statementsand supervision reports from the savings and credit cooperatives regulatory authority. The study utilizedannual panel data for the period of 2017 to 2021. Multicollinearity test, normality tests, autocorrelation test, homoscedasticity, stationarity test and model specification test werecarried out prior to panel data analysis. Data wasanalyzed using descriptive statistics, Pearson’s correlation analysis and panel regression analysis. STATA software wasused for the analysis. Ethical standards and regulations wereadhered to accordingly.The regression results revealedthatcapital adequacy had a significant negative effect on NPLs (β=-0.3249614, p-value=0.000<0.05).In view of the findings, the study recommends thatregulatory authorities in Kenya should take a proactive response in establishing and enforcing robust capital adequacy standards for DT SACCOs. In addition, higher levels of capital adequacy and improved management efficiency are associated with reduced NPLs ratio among DT SACCOs in Kenya, henceimproved financial stability. Keywords:Capital Adequacy, Financial Stability, Deposit Taking, Savings and Credit, Co-Operative Societies | |
| dc.identifier.citation | How to cite this article:Birisi, H. B., Omagwa, J.& Musau, S. (2024).The Link between Capital Adequacy and Financial Stability: Evidence from Deposit Taking Savings and Credit Co-Operative Societiesin Kenya, Journal of Finance and Accounting, 8(6) pp.1-15. https://doi.org/10.53819/81018102t4268 | |
| dc.identifier.issn | 2616-4965 | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/29963 | |
| dc.language.iso | en | |
| dc.publisher | Stratford Peer Reviewed Journals and Book Publishing | |
| dc.title | The Link between Capital Adequacy and Financial Stability: Evidence from Deposit Taking Savings and Credit Co-Operative Societiesin Kenya | |
| dc.type | Article |