Determinants of Loan Defaults in Saccos in Kenya: a Case of Metropolitan National Sacco Ltd in Kenya

Abstract

This research project gives an analysis of factors determining loan defaults in SACCOs in Kenya. This research work explains in-depth undertaking of loan repayment through stipulation of the background, determinants of loan defaults, firms under survey, research problem, the objectives and significance of the study in chapter one. Chapter two of this academic work explains the theoretical framework, empirical and conceptual framework in addition to a literature review summary of the study carried out on the determinants of loan defaults in SACCOS. Chapter three focuses on the design of the research and identi-fies the target population of study from which data is collected by use of secondary data collection method. It also outlines the method of collecting data besides the instruments used to undertaken the data collection, consequently explaining how data will be ana-lyzed and presented in order to be of assistance to the user. The secondary data was ob-tained from relevant literature from various sources majorly from Metropolitan National SACCO Ltd financial statements and reports from SASRA being the umbrella body. In chapter four data was annotated and compiled for precision, evenness, consistency, pleni-tude and aligned for ease of codification and tabling for a conclusive dichotomy and analysis. This academic work further adopted the use of SPSS cum multiple regression models to analyze the data. The research study finally as highlighted in chapter five, found out that defaulted loans by SACCOS has significantly being on the rise and several determinants affected the loan defaults key among them increased transaction costs and low recovery rate. Therefore, depending on the findings the study recommended that it‟s procedural for SACCOS to solve the menace of loan defaults and this calls for review on the issue of transaction costs in which they not only need to moderate the transaction fees but should also up their game on loan recovery techniques by recruiting and training pro-fessionals.