Corporate Governance Practices and Solvency of Deposit Taking Sacco’s in Kisumu County Kenya

Abstract

The purpose of the study was to examine the effect of corporate governance on solvency of deposit taking SACCOS licensed by SASRA in operating in Kisumu County, Kenya. Specifically, this study examined accountability and transparency, audit committee and board formation and their effects on solvency of the savings and credit cooperative societies that take deposit in the county of Kisumu, Kenya. The study employed descriptive survey research design. The target population for this study was 11 deposit taking SACCOS licensed by SASRA in Kenya for the period 2011- 2015. Data collected from SASRA i.e. financial statements in their custody was used. Collected data was analysed using both descriptive and inferential statistics. Mean and frequency was used for analysis, while correlation and regression analysis was used to analyze the degree of relationship between the variables in the study. The study realised that corporate governance is key in the financial health of SACCOS and firms in general. The research further showed through regression, that the firm’s performance was dependent on the predictor variables i.e. accountability and transparency, audit committee and board formation. Results show that good accountability and transparency practices, effective audit committee and transparent and efficient board formation enhance corporate governance and performance and that when such factors are capitalized, it enhances firms’ solvency.