| dc.description.abstract | A firm performance is conceivably affected by a variety of market-oriented and firm strategic
factors. Thus, in order to analyze the firm profitability relationship, these variables have to take
taken into consideration as well. While a firm’s market share is widely regarded as an empirical
proxy of market power, various studies find strong support for other variables reflecting the
extent of market power, such as capital intensity, advertising intensity, R&D expenses and
market concentration. Capital requirements, R&D and advertising expenses are widely
considered as sources of entry barriers, thus raising the market power of firms in an industry.
This study employs correlation research design. The study used cross - sectional study in which
data was gathered just once over the period 2009 to 2013 and as such, a causal study was
undertaken in a non-contrived setting with no researcher interference. The population of interest
in this study was all the Saccos operating in Nairobi. Currently, there are 43 registered Saccos
with the regulator and have a registered office of operations. The reason as to why this industry
was chosen is due to the availability and the reliability of the financial statements in that they are
subject to the mandatory audit. In addition, all the Saccos have their headquarters in Nairobi and
its environs and this will make it convenient in terms of time and accessibility to the researcher.
Since the number of the respondents is limited, then the study was a census survey. Data was
collected from the annual reports of the 43 Sacco’s submitted to the Saccos Societies regulatory
authority (SASRA). All the Saccos that will have operated continually between 2009 and 2013
were included to ensure that the sampling frame is current and complete. From the financial
statements, the researcher collected information on the annual sales, number of years the Saccos
have been in operation, firm’s growth rate in terms of sales, leverage and ration of dividend
payout. In addition, in order to obtain a representative sample from the population, a number of
filters was applied. Observations of organizations with anomalies such as negative values in their
total assets, current assets, fixed assets, capital, depreciation or the interest paid were eliminated.
In addition, only organizations that will have continuously operated over the period 2009 to 2013
was considered in the study. Multiple regression analysis was applied to the data to examine the
determinants of the Saccos performance in Nairobi. The regression model ran from the financial
reports of the Saccos that had been in operation since 2009 and whose annual report was
available for the periods. The statement of financial position as well as the statement of financial
performance and their notes was studied to get the data for the variables mentioned in the model.
A positive coefficient was established between Sacco’s age and its profitability. This implies
that a unit increase in Sacco’s sale leads to 0.53 units increase in Sacco’s profitability. A unit
increase in the year of inception of Sacco’s lead to 0.042 units increase in Sacco’s financial
performance. Growth rate was found to have a positive effect on the Sacco’s profitability.A unit
increase in Sacco’s growth rate leads to 0.086 units increase in Sacco’s rate on assets. A unit
increase in Sacco’s tangible assets lead to 0.043 units increase in Sacco’s profitability. However,
negative relationship between Sacco’s leverage ratio and profitability was established. A unit
increase in Sacco’s leverage ratio lead to 0.126 units decrease in Sacco’s profitability while a
unit increases in Sacco’s liquidity lead to 0.561 units increase in Sacco profitability | en_US |
