dc.description.abstract | Firm characteristics are very crucial for the performance of firms in general and Deposit
taking savings and credit cooperative societies. The current study therefore sought to
examine the effect of firm characteristics on profitability of deposit Taking Savings and
Credit Cooperative Societies in Kenya. The study was based on three theories including
Resource Based View theory, Efficient Market Hypothesis and Liquidity Preference
Model. The current research adopted a descriptive survey design to establish the effect of
firm characteristics on profitability of DT-SACCOs in Kenya. Specifically the study
targeted 135 DT-SACCOs that are fully licensed by SASRA before the study period and
have financial data for the five year period of the study from 2013-2017. The sample size
was 56 DT-SACCOs. The study employed simple random sampling to select the number
of DT-SACCOs that formed part of the study. Study relied on Secondary data on the
financial performance of DT-SACCOs retrieved from the SASRA SACCOs supervision
annual reports for the five years 2013,2014,2015,2016 and 2017. Individual SACCOs
also provided audited financial statements for the last five years. The retrieved data was
recorded on data collection sheets. The data recorded on data collection sheets were
keyed in Microsoft excel and the excel file exported to STATA version 14. The data were
analysed with aid of STATA where descriptive and inferential statistics were generated.
The descriptive analysis involved mean, standards deviation, Minimum and maximum.
The Inferential statistics involved diagnostic test and panel data regression analysis. The
overall significance of the model was examined at 5% level of significance using F-test
while the significance of individual independent variables were examined at 5% level of
significance using student t-test.If the value of significance is less than the thresh hold of
5%, then the variable or the model is said to be statistically significant. The data was
subjected to diagnostic tests to evaluate conformity with multiple regression model
assumptions. This ensured validity of the results. The study employed normality,
heteroscedasticity, multicollinearity, serial correlation and unit root diagnostic tests. The
findings established that Leverage had a statistically insignificant effect on profitability
of DT-Saccos in Kenya, Operational efficiency had a statistically significant effect on
profitability of DT-Saccos in Kenya, asset quality had a statistically significant effect on
profitability performance of DT-Sacco in Kenya. Finally, the study established that
capital adequacy had statistically insignificant effect on profitability of DT-Saccos in
Kenya. The study concludes that Firm size, asset quality and operational efficiency had
statistically significant effect on profitability while leverage and capital adequacy did not
show significant effect on profitability of DT saccos. “Based on the conclusions, a
“Management of DT-Saccos has to continue working on the operational efficiency as
improved efficiency translates to improved profitability. Additionally, the management of
DT-Saccos should put more emphasis in offering loans to clients who are in a position to
pay back on time as agreed this will help in lowering the level of nonperforming loans
within the DT-Saccos sub sector. Finally, study further suggest to SASRA to inform the
investing public of any DT-Sacco carrying out major restructuring such that they are
aware before making any decision since the value of the firm may change greatly during
and after major restructuring. | en_US |