| dc.description.abstract | Financial innovation is defined as the creation or designing of new financial products,
better process, efficient systems and institution alliances. It also entails the constant
improvement of the existing products and activities of financial institutions in order to
meet the emerging needs of the stakeholders. All financial innovation strategies are
implemented using a few basic techniques such as increasing or reducing risk, pooling
risk, swapping income streams, splitting income streams and converting long-term
obligations into short-term ones. Innovation strategy is a determinant of SACCO
financial performance and provides additional insight into the indirect contribution of the
individual dimensions of innovation strategies to SACCO performance. The objective of
this study was to determine the relationship between financial innovation and financial
performance among SACCOs in Mombasa County Kenya. The study aimed at
establishing whether institutional innovation, process innovation and product innovation
influence the financial performance of SACCOs in Mombasa County. The study used a
descriptive research design. This study aimed at collecting and analyzing data on the
influence of financial innovation variables on the financial performance of SACCOs in
Mombasa County. The population of the study was 165 SACCOs based in Mombasa
County. The study used a random sample of 36 SACCOs. Data was collected from both
primary and secondary sources. The primary data was collected using a semi-structured
questionnaire while secondary data was collected from the SACCOs annual reports.
Primary data collected was mainly on the extent to which the SACCOs applied financial
innovation while the secondary data collected was on the financial performance. The data
was analyzed using a multivariate regression analysis with the help of SPSS version 21.
The results indicated that there was a positive relationship between financial innovation
and financial performance of the SACCOs in Mombasa County. The regression analysis
revealed that all financial innovation variables had a positive effect on the financial
performance of the SACCOs in Mombasa County. The most influential variable was
product innovation followed by process innovation and lastly institutional innovation.
The coefficient of determination (R2) showed that that 23.2% of the financial
performance of SACCOs in Mombasa County was influenced by financial innovation.
The study concluded that financial innovation is a predictor of financial performance of
SACCOs in Mombasa County. The SACCOs in Mombasa County employed all the three
types of financial innovation to a great extent and all had a positive effect on the financial
performance. The study recommended that the SACCO management boards should apply
more product innovation as this had the greatest impact on financial performance
followed by process innovation. The study further recommended that the government
should pass legislation that will support the SACCOs to adopt more innovation in order
to improve performance. This will help them move from the traditional products to more
innovative products that are tailored to meet members‟ needs. | en_US |
