Abstract: The purpose of this project was to establish the factors affecting the financial performance of Sacco’s in Kiambu County. The objectives of the study that were used were loan default, dividend policy and membership size of the Sacco’s. This research involved the use of a descriptive design. The research focused on all the 12 Sacco’s in Kiambu County licensed by SASRA the regulatory body by the end of 2014. The study was based on data published from the audited annual reports of the Sacco’s and covered a period of 5 years from 2010-2014. Quantitative data collected was analyzed by use of descriptive statistics and inferential statistics using SPSS version 17 and presented through percentages, mean, standard deviation with the key independent variables being Return on Assets and Return on Equity. The study found out that dividend policy and membership affected positively the financial performance of Sacco’s whereas loan default negatively affected the financial performance. The linear regression analysis shows a relationship, R = 0.713 and R2 = 0.509 which means that 50.9% of the corresponding change in Return on Assets can be explained by Membership, loan default and dividend policy. The beta coefficients indicated the relative importance of each independent variable (Membership, loan default and dividend policy) in influencing the dependent variable (ROA). Dividend policy was the most important in influencing Return on Assets since it has the highest beta value (beta= -0.458). The second most influential is the Loan default with a beta value (beta= -0.385). Membership had the weakest influence on ROA with a beta value (beta=0.201). The findings of the study recommended that the Sacco should work towards joining the credit reference bureau and to educate their members in prompt payment. It also recommended that the Sacco should take insurance covers for the loans to reduce the loan losses. The Sacco should aim on boarding more members to their Sacco thus will increase the members saving and also expand on the investment avenue so as to establish a consistent way of paying the dividend.
Keywords: Loan default, Dividend Policy, Membership Size and financial performance.
Title: Factors Affecting Financial Performance of Savings and Credit Co-Operative Societies: Case Study Kiambu County
Author: NJIHIA Annitah Wanjiru, DR. MUTURI Willy
International Journal of Management and Commerce Innovations
ISSN 2348-7585 (Online)
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