Influence of Product Characteristics on Credit Accessibility of Sacco’s in Kenya

Abstract

The objective of SACCO’s is members’ empowerment through savings mobilization, disbursement of credit and ensuring long-term sustainability through prudent financial practices. A national survey conducted by Central bank of Kenya in 2016 on financial access revealed that access to SACCO’s credit accessibility has reduced despite the increase in credit demand. This continuous decline in access to credit shows that SACCO’s members are not able to access the credit from their SACCO’s and they seek for credit from other financial institutions. The objective was to determine the influence of product characteristics on credit accessibility in SACCO’s. The study adopted a descriptive research design and data was collected using a questionnaire. Descriptive statistics and linear regression analysis were used to test the hypothesis. The study found that credit accessibility in Sacco’s is significantly influenced by product characteristics. The findings also revealed that the number of loan applications received in SACCO’s from Imenti North Sub-County has dropped significantly with very few loan applications being successful. The study recommended that SACCO’s should start investing in products innovation in order to ensure that they have a wide range of products which are tailor made to suit their member’s needs and Sacco’s should develop a policy that allows members to use other forms of collateral at their disposal in order for them to qualify for higher loans than the ones guaranteed by their shares only. This will increase the number of members accessing credit and reduce the stiff competition that SACCO’s experience with the other credit service providers. SACCO’s should come up with ways of developing products that have features which will encourage their members to borrow loans.