Firm characteristics and financial stability of deposit taking savings and credit co-operative societies in Kenya
| dc.contributor.author | Birisi, Hesborn O. | |
| dc.date.accessioned | 2025-03-19T08:54:18Z | |
| dc.date.available | 2025-03-19T08:54:18Z | |
| dc.date.issued | 2024-11 | |
| dc.description | A thesis submitted to the school of business, economics and tourism in partial fulfilment of the requirements for the award of degree of doctor of philosophy in business administration (finance) of Kenyatta University, November 2024 Supervisors Dr. Job Omagwa Dr. Salome Musau | |
| dc.description.abstract | In Kenyan, the financial stability of deposit-taking savings and credit cooperative societies (DT SACCOs) has experienced a downward trend as evidenced by increase in non-performing loans (NPLs), a significant concern in recent years. The SACCOs Regulatory Authority's 2020 report highlights the increasing percentage of NPLs to gross loans. If this trend continues, it will negatively impact on the sector’s ability to provide essential financial services. This study investigated the effects of firm characteristics on financial stability of deposit-taking savings and credit cooperative societies in Kenya. Specifically, the study examined the effects of liquidity, capital adequacy and management efficiency on financial stability of SACCOs in Kenya. Additionally, it examines how the operating environment and competitiveness moderate and mediate these relationships, respectively. The research was grounded on agency, market power, financial intermediation, and liquidity preference theories. Utilizing a positivist and an explanatory research design, the study targeted 160 operational institutions, collecting data from their financial records and regulatory reports from 2017 to 2021. The research performed diagnostic tests of Normality, Heteroscedasticity, multicollinearity, stationarity, and model specification before applying regression models Data was analyzed using descriptive and inferential statistics with STATA software. The researcher adhered to ethical considerations of confidentiality, privacy and anonymity. The findings showed that adequacy of capital, liquidity, and management effectiveness together account for about 71.96% of the differences in financial stability among these cooperative societies (R-squared value of 0.7196). Specifically, having enough capital was linked to fewer non-performing loans (NPLs) (β=-0.3249614, p-value=0.000<0.05), higher liquidity was associated with a higher NPL ratio (β = 0.410056, p=0.003<0.05), and better management led to fewer NPLs (β=-0.0710747, p-value=0.002<0.05). The operating environment was found to significantly affect how firm characteristics influence financial stability. However, the level of competition among these entities only partly explained the relationship between firm characteristics and financial stability. In view of the findings, it is recommended that regulatory authorities in Kenya should take a proactive stance in establishing and enforcing robust capital adequacy standards for these institutions. The study findings highlight the critical role of capital adequacy in ensuring the financial stability of these cooperative societies. In addition, higher levels of capital adequacy and improved management efficiency are associated with reduced NPLs ratio among SACCOs in Kenya, hence improved financial stability. The study thus recommends that the managements of these financial institutions should consider exploring opportunities to strengthen their capital adequacy ratio through prudent financial management and strategic partnerships and strive to improve on their management efficiency. Additionally, SACCOs in Kenya should observe liquidity management guidelines by SASRA and maintain an optimal balance between liquidity and lending activities | |
| dc.description.sponsorship | Kenyatta University | |
| dc.identifier.uri | https://ir-library.ku.ac.ke/handle/123456789/29819 | |
| dc.language.iso | en | |
| dc.publisher | Kenyatta University | |
| dc.title | Firm characteristics and financial stability of deposit taking savings and credit co-operative societies in Kenya | |
| dc.type | Thesis |