Level of Compliance to Sasra Regulations and Financial Performance of Deposit Taking Savings and Credit Co-operative Societies in Nairobi County, Kenya

Abstract

The primary goals of deposit-taking SACCO Societies are member empowerment through the mobilization of funds, the provision of credit, and the maintenance of SACCOs' long-term viability through sound financial management. However, there are a number of obstacles to encouraging good financial management, including a lack of capital investment, loan defaults, and the evaluation and management of risks. This study's main goal was to ascertain how the SASRA regulation affected deposit-taking SACCOs' financial performance. The study's particular specific objectives were to ascertain the impact of risk classification requirements, performance reporting guidelines, and capital adequacy regulations on the financial performance of deposit-taking SACCOs in Nairobi County. The study also identified the financial technology's moderating effect on the relationship between SASRA regulation and financial performance. The study was informed by Stakeholder Theory, Agency Theory and Financial Stewardship Theory. The study adopted cross-sectional study design and targeted all the forty-six licensed DT SACCOs. Census approach was used and the units of observation were the CEOs of these SACCOs. Data from the study were both primary and secondary. With the use of SPSS and the use of both descriptive and inferential statistics, the acquired data was examined. The independent factors were connected to the dependent variable using a multivariate linear regression model. The multiple linear regression analysis findings revealed R2 of 0.507, implying that the independent variables used in this study; capital adequacy regulations, liquidity level regulations, performance reporting policy, risk classification requirements jointly were able to explain 50.7% of the variation in financial performance. The study also found that there was a positive and statistically significant relationship between all the independent variables and financial performance. The study also found that financial technology had a moderating effect on the relationship between SASRA rules and the financial performance. This was one of the conclusions drawn from the research. The research concluded that regulations imposed by SASRA have a considerable favorable effect on the financial performance of SACCOs in Nairobi County that accept deposits. Because of this, the research suggests that managers of DT SACCOs should strictly adhere to the conditions established by SASRA legislation in order to ensure that they continue to enjoy the benefits that have been outlined in this study. The research also suggests that the government, via SASRA and the Ministry of Industry and Co-operative development, should continue to foster the growth of DT SACCOs by creating an atmosphere that is conducive to their success and enacting helpful legislation.