Effect of Mobile Banking on the Financial Performance of Sacco Societies Regulated by the Sacco Societies Regulatory Authority in Kenya

Abstract

Deposit taking SACCOs are expected to spread the financial services to Kenya especially them that are not reached by commercial banks. To enhance their financial performance most financial institutions including SACCO societies regulated by SASRA have embraced the use of mobile banking technology. This study investigated on the effect of mobile banking on the financial performance of SACCO societies regulated by SASRA in Kenya. A descriptive research design was adopted in this study. The target population was the deposit-taking SACCO societies operating in Kenya. A random sample of 20 large and medium tier licensed Deposit Taking SACCO Societies as at 31st December 2017 was used. The study used secondary data, which was obtained from the Sacco Societies Regulatory Authority (SASRA), the Communications Authority of Kenya and the Competitions Authority of Kenya. The results of the study produced adjusted R-square value of 0.7369 implying 73.69% of the variation in the financial performance of SACCO societies regulated by SASRA can be explained by the six selected independent variables while 26.31% of the financial performance of SACCO societies regulated by SASRA in Kenya was associated with other factors not covered in this research. The study established that an annual volume of money transacted on mobile banking positively and significantly influences the financial performance of SACCO societies regulated by SASRA in Kenya. Further, the study revealed that rise in the number of subscribers to Mobile Banking would result to increase in the financial performance. Finally the study established that capital adequacy, SACCOs Society Liquidity, quality of asset and efficiency positively and significantly influenced the financial performance of SACCO societies regulated by SASRA in Kenya. The study recommends that the SACCO societies regulated by SASRA in Kenya should continue with the popularisation of mobile banking in the industry as this has a positive effect on their financial performance.