Abstract
Purpose: The purpose of this study was to evaluate the effect of management efficiency on financial performance of savings and credit societies in Kenya.Methodology: The study employed an explanatory research design. The target population was 83 registered deposit taking SACCO’s in Kenya that have been in operation for the last five years. The sample size for the study was all 83 SACCOs that have remained in existence since 2011-2015. Census methodology was used in the study. Both primary and secondary sources of data were employed. Multiple linear regression models were used to analyze the data using statistical package for the social sciences (SPSS) and STATA. A pilot study was conducted to measure the research instruments reliability and validity. Descriptive and inferential analysis was conducted to analyze the data. The data was presented using tables and graphs.Results: Based on the findings the study concluded that management efficiency has no significant influence on the financial performance of savings and credit societies in Kenya. The univariate regression results showed that management efficiency has no significant influence on the financial performance of savings and credit societies (p=0.173).Unique contribution to theory, practice and policy: The study recommended that with regard to credit risk management, the management should undertake measures to improve Capital adequacy, Asset quality, Management efficiency, Earnings and Liquidity. Further, the study recommended that SACCO's should train their employees as this is likely to increase their productivity.
Highlights
1.1 Background of the StudyThe SACCO industry in Kenya plays a very important role as the financial intermediary between savers and investors
Results in table 5 reveal that management efficiency does not have a significant effect on the financial performance of SACCOs
This can be explained by the fact that the p value of 0.994 which is greater than the critical p value of 0.05
Summary
The SACCO industry in Kenya plays a very important role as the financial intermediary between savers and investors. SACCO’s are guided by seven principles as stipulated by the International Cooperative Alliance (ICA); Open and voluntary membership, member economic participation, independence and autonomy, democratic member control, education, training and information, Concern for Community and Cooperation among Cooperatives. SACCO’s are expected to give better and cheaper services to its members as compared to the main stream banks because SACCO’s understands the needs of the members given that they are the owners (Wanyama, Develtere & Pollet, 2008). Services offered by SACCO’s include normal loans, emergency loans, school fees loans and front office services for example; payment of salaries, salary advances, bank cheques, safe keeping of documents, and ATMs (Ngaira, 2011)
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