Moderating Effect of Gross Domestic Product on the Relationship between Camel Rating Model and Financial Performance of Deposit Taking Savings and Credit Cooperative Societies in Kenya

Abstract

The study sought to establish the moderating effect of gross domestic product on the relationship between CAMEL rating model and financial performance of Deposit Taking SACCOs in Kenya. The study originates from the Doctoral dissertation of the first author in which the co-authors served as supervisors. Capital buffer theory and stewardship theories were utilized in supporting the nexus between the variables of the study. Secondary data was collected for the period 2013 to 2022 and panel regression analysis was applied. The study established that the nexus between CAMEL rating model and financial performance in the context of deposit taking SACCOs in Kenya is significantly predicted by gross domestic product. It was consequently concluded that the aggregate of economic growth as reflected by gross domestic product plays a significant role on CAMEL rating model and financial performance nexus with respect to deposit taking SACCOs in Kenya. The study recommends that the Government of Kenya should ensure economic growth in the country. The Government should stimulate economic activities through government policies and activities (of patronizing different sectors). Profits generated by SACCOs during economic expansion should be adequate reinvested into financial intermediation activities as well as other investment opportunities for purposes of diversification.