DETERMINANTS OF FINANCIAL PERFORMANCE OF SACCOs IN NAROK TOWN, NAROK COUNTY

Abstract

Kenya is among the leading countries in Africa that command a large Savings and Credit co-operative movement. However, the financial performance of Savings and Credit cooperatives is often affected by many internal and external factors that undermine the going concern of SACCOs. The general objective of this study was to establish the determinants of financial performance of Savings and Credit Cooperatives in Narok Town, Narok County. The study examined the effect of Membership size, Dividend pay-out and investments on the financial performance of SACCOs in Narok town, Narok County. This study was guided by Organizational Theory, Trade- off Theory and Bird in Hand Theory. The study adopted cross sectional survey research design. The target population comprised of 213-registered SACCOs, where only 17 were active based on the financial statements. Purposive sampling technique was used where 17 active SACCOs in Narok Town were considered. Secondary data was collected from financial statements of individual SACCO. Linear regression technique was applied to analyse data where the dependent variable Return on Equity (ROE) was regressed against the independent variables ( Membership size, Dividends pay-out and investments).The study established Membership size had no significant effect on the ROE, t (87) = 1.71, p=0.090. Dividend pay-out had a significant positive effect on ROE, t (87) = 91.87, p<0.001.Finally, investment had no significant effect on the ROE, t (87) = -0.23, p=0.822.Based on the significant effects of the underlined variables, this study concludes that the combined effect of the independent variables; membership size, dividend pay-out, investment were significant contributors to the financial performance of SACCOs in Narok Town Narok County. The study recommends that SACCOs need to put more efforts in improving their dividend pay-out, build their membership size to boost their savings and improve on their investment which will increase the level of returns in order to enhance financial performance of SACCOs in Narok Town.