| dc.description.abstract | Efficiency of SACCOs is affected by various characteristics such as size, age, bond of
association, adoption of technology and managerial competency. The relationship can be
influenced by appropriate moderating and intervening variables. This study therefore
sought to establish how members‟ income and conduct of SACCOs affects the
relationship between characteristics and efficiency of SACCOs in Kenya. The specific
objectives were to determine the relationship between SACCO characteristics and
efficiency; establish the moderating influence of the income of members in the
relationship between characteristics and efficiency; and determine the intervening
influence of conduct in the relationship between characteristics and efficiency. The study
targeted all SACCOs that are regulated by SASRA for the period 2009 - 2013. DEA was
used to compute efficiency with inputs being member deposits and borrowings;
interest/dividend on member deposits and cost of borrowings; staff costs; and other
operating expenses (such as rent payable, communication costs, office consumables).
Outputs were loans to members and other earning assets (such as interest yielding bank
deposits, treasury bills and bonds; investment in rental property; and shares); interest
income; and other income (includes interest from bank deposits, treasury bills and bonds;
rent from investment property; dividends from shares; money transfer and withdrawal
charges). Multiple regression analysis between efficiency, characteristics and conduct
was carried out. The study findings were that characteristics (specifically size and age)
have a significant positive effect on efficiency of SACCOs and this relationship (for size
only) is moderated by the income of members. Increase in size results in improved
efficiency and, the older the SACCO the higher the efficiency. The higher the income of
members, the stronger the relationship between size and efficiency. Efficiency was
negatively related to strength of bond of association, possibly because weakening of the
bond would be associated with increase in size, which contributes to increased efficiency.
Adoption of technology had a negative relationship with efficiency, with a probable
reason being low levels of computerisation of the SACCOs. Managerial competency was
not significantly related to efficiency. This might be due to that SACCOs are not very
complex entities and therefore the cost of additional competency may not yield payoffs
that are greater than the extra expense. The main academic contribution of the study is the
finding that income of members moderates the characteristics-efficiency relationship.
This means that the results of empirical investigations of the relationship between size
and efficiency are improved if the analysis is carried out separately for entities falling in
different member income strata. Stratification would not improve the relationship
between efficiency and age, bond of association, managerial competency and adoption of
technology. Conduct of SACCO was found not to be a significant intervening variable
between characteristics and efficiency. The study recommends policy interventions
geared towards nurturing existing SACCOs with a view to increasing their size. This can
be through setting a minimum size threshold that would necessitate existing SACCOs to
merge and making it difficult for new ones to be established. Members and managers
should on their own volition also pursue the increase in size strategy, through recruitment
of more members or even merging with other SACCOs. | en_US |
