Effect of Revenue Diversification on Financial Performance of Deposit-taking Saving and Credit Cooperative Organisations in Mombasa

Abstract

This study aims to analyze deposit-taking Saccos in Mombasa to find out how revenue diversification affects their financial performance. This descriptive study looked at how SACCOs in Kenya planned to diversify their income streams and how it would affect their bottom lines. Based on data from 2018 to 2022, the study's population consisted of six licensed Deposit-Taking Saccos in Mombasa County, Kenya. Secondary data sources, particularly audited financial statements, were used for a comprehensive analysis of variables such as revenue diversification, liquidity, firm size, management efficiency, firm age, and financial performance. The study operationalized these variables based on established measures from relevant empirical studies. Data was analyzed using SPSS version 26. Research conducted in Mombasa County, Kenya, on Deposit Taking Saving and Credit Cooperative Organizations (DT-SACCOs) indicated a robust positive relationship between revenue diversification and financial performance. This finding lends credence to the idea that a more diversified revenue landscape leads to better financial outcomes. The analysis of six selected DT-SACCOs revealed varying trends in revenue trajectories and financial performance, with statistically significant correlations for most associations, including revenue diversification, liquidity, and firm size. The study concluded from these findings that promoting and incentivizing revenue diversification strategies, is bound to lead to improvement in financial performance and crucial for the long-term success of DT-SACCOs. While limitations such as a small sample size and geographic focus were acknowledged, they point to opportunities for future research to enhance generalizability and explore qualitative dimensions in understanding the financial dynamics of cooperative organizations in Mombasa.