Abstract:
In Kenya cooperative movement is one of the highly valued strategies used to enhance resource mobilisation
and use. However, studies on factors that contribute to the performance of these cooperatives have
produced mixed results that calls for further research in the same. This paper sought to further examine the
effect of loan default rate on the financial performance of Savings and Credit Cooperative Societies in Narok
County, Kenya. Financial performance was measured by use of return on asset and return on equity. Cross
sectional research design was applied in this study. The target population comprised of 20 registered and
active SACCOs in Narok County. Purpose sampling was used to select only 17 of the SACCOs which had been
active for the six years period of the study. Secondary data from audited financial report between 2013 and
2018 was collected and used for the analysis. Both descriptive and inferential statistics were used to analyse
the relationship between the variables. Statistical Package for Social Sciences version 23 and Microsoft Excel
package were used as appropriate tool to analyse and present the results. The study hypothesis was tested at
a 0.05 significant level. From the findings it was established that loan default rate had a positive statistical
significant effect to financial performance of the SACCOs in Narok County. The null hypothesis on loan default
rate was rejected as it had a p-value of less than 0.05.It was concluded that the rate of loan default among
the SACCOs is a strong predictor of their financial performance. The study recommended that the SACCOs
should put emphasis on ensuring members are able to repay their loans on time to enhance financial
performance. The results are very significant and will go a long way to assist SACCOs to enhance their
financial performance by re-assessing their loan advancement and recovery strategy among their members
