The Effects of Financial Inclusion Strategies on Financial Performance of Deposit Taking Savings and Credit Co-operatives Societies (Saccos) in Kenya

Abstract

Financial inclusion strategies focus on ensuring that the entire society can acquire cheap financial products and services fairly and transparently. The focus of the research was to establish how financial inclusion strategies affect how deposit taking SACCOs in Kenya perform financially. It was grounded on Financial Inclusion Theory (FIT), Diffusion of Innovation Theory (DIT) and Agency Theory (AT). It employed descriptive cross sectional survey design, targeting all deposit taking SACCOs in Kenya. There were one hundred and seventy-six (176) deposit taking SACCOs as at 2021 SASRA report. Reliance was put-on first-hand data collected by the researcher and already published information. Collection of primary data on financial inclusion practices employed the use of structured questionnaire. The already existing data was put together from the yearly published reports regarding financial performance of DTSs. The study employed multiple regression analysis to find out how financial inclusion strategies influenced the extent to which deposit taking SACCOs in Kenya, performed financially. It was found out that DTSs adopted financial inclusion strategies to a moderate extent. This included financial literacy programs, diversification of financial services and mobile money transfer services. Further, it was established that financial literacy programs, diversification of financial services, mobile money services and financial performance were correlated moderately, positively and significantly. The findings also established a positive correlation between financial inclusion practices and how DTSs in Kenya perform financially. It was also determined that financial inclusion practices and performance financially are significantly associated at 0.000 (p<0.05). The findings on regression co-efficients established that financial literacy programs positively and significantly influence on performance, financially depicted by β=.338; p<0.05. Diversification of financial services and mobile money transfer services both have positive though insignificant influence on financial performance depicted by β = 0.215; p>0.05 and β = 0.148; p>0.05 discretely. Total assets however negatively and insignificantly affect financial performance. It concluded that, there is a positive and significant correlation among financial inclusion practices and financial performance. Further, financial inclusion practices affect financial performance of the DTSs. It was also concluded that, DTSs have implemented financial inclusion practices of financial literacy programs, diversification of financial services and mobile money transfer services to a moderate extent. The study recommended that management of DTSs should find ways of improving financial performance through improved financial inclusion practices, especially adoption of mobile banking and digital lending platforms.