Effect of Credit Information Sharing on Loan Performance Among Savings and Credit Cooperative Societies in Nairobi
Abstract
This study was set out to establish the effects of credit information sharing on the loan
performance among SACCOs in Nairobi County. It sought to determine the effects credit
information sharing have in relation to loan performance among SACCOs since the
adoption of the concept in Kenya in the year 2013.Theoretical models predict that
information sharing reduces moral hazard and adverse selection in financial institutions.
The study adopted descriptive research design where data on loan performance was
retrieved from the balance sheets and notes of 42 SACCOs during 2013-2015.Data on
credit reports was obtained from CRB. Multiple regressions was applied to assess the
effect of credit information sharing on loan performance among SACCOs in Nairobi
County. The findings of the study show that there was negative relationship between
number of credit reports accessed from CRB and default rate. There was a negative
relationship between loan credit reports forwarded from CRBs and default. The findings
shows Sacco were using the information provided by CRBs to analyze the borrowers past
credit history. The study concluded that. Credit Information Sharing, increases
transparency among SACCOs, helps them lend prudently, lowers the risk level to the
SACCOs, acts as a borrowers discipline against defaulting and it also reduces the
borrowing cost.
Publisher
University of Nairobi
Description
Thesis