Relationship between financial structure and growth of saving and credit cooperative societies’ wealth in Machakos county
Abstract
Over time, saving and Credit Cooperative Societies (SACCOs) have been investing
heavily to ensure achievement of their objective (mobilizing funds and granting credit to
members) but they have not been able to grow their wealth significantly. This lack of
Growth of SACCOS’ Wealth has threatened their sustainability such that they have not
been able to absorb their operational losses. This has led to the losses been absorbed by
members’ savings and share capital, which leads to their impairment. Although studies
have been done there is insufficient information linking the growth of SACCOs wealth in
Kenya in Machakos County to Financial Structure factors; internal financing and external
financing jointly. The study attempted to understand the factors that can explains the
growth of shareholders wealth of SACCOs in Machakos County. The objective of the
study was establish the relationship between financial structure and growth of saving and
credit cooperative societies’ wealth in Machakos County.
This study used a descriptive survey in soliciting information in the area of research of
Financial Structure and growth of SACCOs’ wealth. The target population was 33
SACCOs which were active in Machakos County in the year 2012. The study used census
and data was collected from secondary sources. The data collected was analyzed using
both descriptive and inferential statistics with assistance of Statistical Package for Social
Sciences (SPSS) software version 17.0.
The study found that; increase internal financing increase led to an increase in Growth of
SACCOs wealth which was explained by a B-coefficient of 0.046 (meaning as internal
financing increases, Growth of SACCOs wealth increases too) and vice versa. it was
further found that an increases in external financing led to an increase in growth of
SACCOs wealth (B-coefficient = 0.182) and vice versa. The study found that Growth of
SACCOs wealth as predicted by internal financing (p-value = 0.011) and external
financing (p-value = 0.000) and the coefficient of determination of 72.90%. The study
therefore concludes that internal financing is associated to growth of SACCOs wealth in
Machakos County, and external financing is associated growth of SACCOs wealth in
Machakos County, answering the study pertinent questions. The study recommends that;
SACCO should review or design their policies on internal financing to ensure that
optimum internal financing was availed; SACCOs should either review their by-laws and
working policies to ensure that the optimum external financing is encouraged. Further
studies should be conducted to strengthen the information on the area studied.
Citation
Master Of Business Administration, University of Nairobi, 2014Publisher
University of Nairobi