Effect of Prudential Framework on the Financial Performance of Deposit Taking Saccos in Nairobi City County

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Date
2023
Authors
Ngunjiri, Margaret Njeri
Journal Title
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Publisher
Kenyatta University
Abstract
The SACCO Societies Act's founding legislation established the SACCO Societies Regulatory Authority's authority over, management of, and guidelines for store taking (SASRA). Prudential standards have been introduced to direct SACCO development and improvement through this new legal structure. The goal of this survey was to fill the gap by taking a research on the effect of the Sacco prudential framework on the financial performance of deposit taking SACCOs in Nairobi City County. The survey utilized descriptive research design to research the connection between the performance of the Sacco prudential guidelines and financial performance. The target populace would be the whole populace of the 36 stores taking SACCOS in Nairobi City County. The researcher focus on the 36 Chief executive officers and Staff in these 36 Deposit taking SACCOS in Nairobi City County. The examining procedure for the examination would purposive sampling. Purposive sampling is material to subjective exploration and involves the researcher choosing people and locales in light of the singular's capacity to show comprehension of the examination issue and focal peculiarity in the review. The data for this examination was gathered utilizing questionnaires. Wiersman (1986) the most appropriate examination instrument for enlightening studies research is a questionnaire. The items in the questionnaire were tested for reliability and validity. The information gathered was analyzed through the descriptive statistics like frequency tables, percentages with the assistance of the Statistical Package for Social Sciences (SPSS). Based on the results, it was determined that the corrected R2 coefficient was 0.850, or 85.0%. This illustrates how the four factors; capital sufficiency, liquid management, credit management, and investment restrictions can account for 85% of variations in the financial performance of SACCOs. The survey comes to the conclusion that investment limitations, credit management, enough capital, and liquidity all play a significant role in the rise of the financial income of deposit-taking SACCOs. The protection of deposits and the stability of financial systems depend on the core capital. The prudential framework is crucial for maintaining professionalism in the financial markets, safeguarding deposits, and raising financial earnings. Thus, it was clear that the prudential regulatory framework had implications for controlling the capital structure to impact SACCOs' financial performance. The survey recommends that deposit taking SACCOs should follow the capital adequacy guidelines in order to protect themselves from the risk of going bankrupt. To guarantee that SACCOs are adequately capitalized, management should implement tighter internal control systems on capital adequacy practices. This will improve the SACCOs' capacity to manage any risks that might occur from their line of work. To be able to benefit from increasing business, SACCOs must also adhere to all the standards outlined in the SACCO rules and regulations.
Description
A Research Project Submitted to the School of Humanities and Social Sciences in Partial Fulfilment of the Requirements for the Award of the Degree of Master of Arts in Public Policy and Administration of Kenyatta University
Keywords
Prudential Framework, Financial Performance, Deposit Taking Saccos, Nairobi City County
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