dc.description.abstract | Savings And Credit Co-operative Societies (SACCOS) are essential institutions as
they are able to advance loans at interest rates lower than those charged by other
financial institutions. In fact, the core objective of SACCOS is to ensure members
empowerment through mobilization of savings and disbursement of credit. In Kenya,
SACCOS have mobilized over Kshs.200 billion in savings, accounting for over 30%
to National Domestic Saving. However, as financial institution, SACCOS should
manage the demand and supply of liquidity in an appropriate manner in order to
safely run their business, maintain good relations with the stakeholders and avoid
liquidity problems. When firms have problems with liquidity they may defer their
payments to creditors which is a harmful for companies and can result in several
consequences such as worse credit terms in the future.SACCOS have a high exposure
to credit risk as well as operational risks; these debts may lead to collapse of the
SACCOS. This study sought to establish the effect of financing strategies on the
liquidity of savings and co-operative societies licensed by SASRA. Specifically
looking at effect of debt financing, equity financing, members‟ savings, income
source diversification and the operational variable of micro-economic variables. This
study employed descriptive survey. Populations of the study included the 34
SACCOS licensed by SASRA in Nairobi County. A census survey of all the 34
SACCOS was carried out. This study collected secondary data from financial
statements of the SACCOS involved. Descriptive statistics as well as inferential
statistics were carried out. According to the study‟s results, all the factors were
significant in determining SACCOS liquidity. Leverage was found to influence the
liquidity of SACCOS licensed by SASRA operating in Nairobi County most. The four
independent variables that were studied; leverage, members‟ savings, diversification,
and macro-economic variables explain a substantial 68.7% of liquidity of SACCOS
operating in Nairobi County as represented by Coefficient of determination. The study
concludes that financial strategies positively and significantly influence the liquidity
in SACCOS licensed by SASRA operating in Nairobi County. The study
recommended that SACCOS should approve strategy and significant policies related
to the management of liquidity risk under both normal and stressed conditions and
review and approve these policies frequently as need arise. Also, it was recommended
that a structure should be put in place to effectively execute financial strategies and
also develop methodologies and policies to determine the level of earmarked liquid
assets. | en_US |