Effect Credit Management on Organization Perfromance of Savings and Credit Cooperative Organisations in Narok County Kenya
Abstract
Due to the significant losses that financial institutions are experiencing, credit
management has become more significant in recent years. Notably, the decline in loan
repayment among members is the primary issue affecting SACCO's credit management.
There is a high incidence of credit risk, which is evident in the SACCOs' increasing
levels of non-performing loans over the past ten years, which has hurt their profitability.
This trend not only jeopardizes the SACCOs' survival and viability, but also makes it
more difficult for them to fulfill their original purposes of bridging the financing gap in
the mainstream financial sector and extending credit to the rural unbanked population.
The objective of the study is to establish the effect of credit management on organization
performance of SACCOs in Narok County. The9 study9 was anchored9 on9 three9 t theories,
namely, asymmetric information theory, the modern portfolio theory and the transaction
cost theory. For the research, a descriptive cross-sectional design was used. The 16
SACCOs in Narok County made up the study's target population. Purposive sampling
was used in this investigation. This is where the researcher selected the appropriate
respondents to collect data from. The sample of the study was 32 respondents from the 16
SACCOs targeted. The study employed both descriptive and inferential analyses. While
inferential analysis aims to test hypotheses, descriptive analysis's goal is to present
insightful summaries of the research variables. The findings indicated that credit policy in
the SACCOs is essential since they provide a framework for offering and recovering
credit financing. Moreover, due to the high risk associated with lending money to the
members, the findings indicated while the SACCOs offer lenient interest rates, stringent
policies were found to influence loans recovery. The study found that credit terms as
measured by interest rates and period of loan repayment has a positive effect on
organization performance. Credit appraisals was measured in terms of client capacity,
character and collateral. According to the findings, credit appraisals help the SACCOs in
lowering risks. As such, the study established that risk control strategy has been
implemented to mitigate such risks. From the study, it was concluded that credit
management strategies significantly impacts organization performance of SACCOs in
Narok County. the study recommends that the government policy makers should step in
and offer subsidies to SACCOs.The study also recommends that the SASRA should
readjust their frameworks and policies in consideration to the emerging issues across the
world.
Publisher
University of nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
The following license files are associated with this item: