Effects of Product Innovations on the Financial Performance of Savings and Credit Societies Licensed by Sacco’s Societies Regulatory Authority in Kenya

Abstract

Due to complex and dynamic environment SACCOs operate from, there is an evident force that contributes to failure of some of them and deteriorating growth for those that survive. This is due to numerous challenges that are unique and specific to the sector in general. The objective of the Study was to find out how product innovation affects the financial performance of Savings and credit societies registered by SACCOs Societies Regulatory Authority (SASRA) in Kenya. The study used a descriptive research design. In this study, the population was all SACCOs licensed by SASRA in Kenya that have been in operation during the period 2008 to 2017 which are one hundred and seventy five in number. Therefore the sample size was forty five SACCOs being twenty five percent of the population.The study collected secondary data. Quantitative analysis was then employed through descriptive statistics incorporating the measure of central tendency in generating applicable frequency counts, percentages, mode, mean and median where possible. Regression results indicated that the value transacted using ATMS positively and significantly affected the financial performance of the SACCOS. Additionally, it was revealed that value transacted using internet banking affected the financial performance of SACCOS positively and significantly as well. The results further revealed that value transacted using mobile banking had a positive and significant effect on financial performance. The value transacted using EFT as well affected the financial performance in a positive and significant way. The results further revealed that volume of lending to groups affected the financial performance positively and significantly. The study concluded that the value transacted using ATMS, value transacted using internet banking, mobile banking, and EFT all significantly and positively affected the financial performance of SACCOs. The study concluded that the volume of lending to group positively and significantly affected the financial position of SACCOs. Following the results from the study, it is recommended that SACCOS should enhance their products by being more innovative so that they can improve on the financial performance continuously. Some of the new financial products and services include introducing new saving plans and deposit accounts in order to mobilize more savings. According to the study’s finding, further research should include an analysis of how SAACO’s financial performance and production innovation are related. This could be carried out by interviewing the key SACCOs’ informants and it would provide insights that enhance the performance of SACCOs by indicating the intricate relationship between such variables.