| dc.description.abstract | The SACCO subsector is part of the massive Kenyan co-operative movement comprising of both
financial and non-financial cooperatives. SACCOs have played an important role in the
development of the Kenyan economy which has led to the uplifting of the standards of living for
the people. Through their SACCOs members are able to access quality education and medicare,
funds for enterprise development, home purchase or construction and many other financial
benefits through loans at reduced lending rates. The critical role of SACCOs in the country‟s
economy at large has been recognized under vision 2030 for mobilization of savings and
investments. Due to the rapid growth, the government committed itself to establish SACCO
legislation, implement international financial performance standards and supervising SACCOs
aimed at providing incentives for improvement of SACCO management and performance.
In light of this, the study sought to establish the effect of the lending interest rates on the
financial performance of SACCOs in Kenya. The study used a causal research design which
relied on control factors. The study used secondary sources of data from published audited
annual reports of accounts for the selected SACCOs. The performance of the SACCOs was
analyzed using the net interest income, the net operating income and the return on equity. The
SACCO performance for five years was compared against the annual average commercial
lending rates as set by the Central Bank of Kenya. Data collected was presented using tables and
figures and graphs. The data was analysed in Microsoft Excel 2007 version.
The study confirmed that the financial performance of SACCOs is not affected by the changes in
the commercial lending interest rates as set by the Central Bank. This is because the realized Net
Interest Income (NII), Net Operating Income (NOI as well as Return on Equity (ROI) for the
sampled SACCOS did not increase or decrease with an increase or decrease of the lending
interest rates. | en |
