dc.description.abstract | In the realm of business, the pursuit of stability financially is paramount, as it signifies an
enterprise's ability to fulfill its financial commitments. This financial soundness is, in turn, a direct
result of prudent financial decision-making, which serves as a catalyst for organizational growth
and the attainment of strategic goals. The core objective of this study was to delve into the intricate
relationship between financial soundness and the profitability of deposit-taking Savings and Credit
Cooperative Societies (SACCOS) operating in Kenya. To obtain data that would be both relevant
and fitting for the study's objectives, a systematic random sampling approach was meticulously
employed. This meticulous method led to the selection of 50 firms, carefully chosen by selecting
every third element from the comprehensive list of Deposit-Taking SACCOS (DTS). This
approach was dictated by the presence of 150 DTS entities in the year 2020, as reported by SASRA
in 2021. Notably, this research predominantly relied on quantitative secondary data, a method
chosen for its inherent advantages. These benefits include its capacity to facilitate comparative
analyses, its ability to reduce resource requirements, its applicability in longitudinal studies, and
its provision of data permanence over time. The outcomes of the regression analysis undertaken in
this study have provided illuminating insights into the relationships between various financial
factors and profitability. Regression coefficient for capital adequacy emerged as statistically
significant and positively oriented (β = 0.027, p = 0.000 < 0.05). This signifies that an increase of
one unit in capital adequacy is associated with a substantial 0.027-unit enhancement in the
performance financially of Kenyan deposit-taking SACCOs. Additionally, analysis pointed out
that the coefficient for liquidity was both statistically significant and positively inclined (β = 0.003,
p = 0.020 < 0.05). In practical terms, this suggests that a one-unit increase in liquidity corresponds
to a noteworthy 0.003-unit improvement in profitability. as a consequence, regression results
demonstrated that the coefficient for management efficiency was statistically significant and
positively oriented (β = 0.020, p = 0.047 < 0.05). This implies that a unitary augmentation in
management efficiency leads to a significant 0.020-unit improvement in profitability. In light of
that, analysis underscored the statistical significance and positive orientation of the coefficient for
asset quality (β = 0.063, p = 0.000 < 0.05). Essentially, this indicates that a one-unit improvement
in asset quality results in a substantial 0.063-unit enhancement in profitability. on the other side,
regression analysis revealed that the coefficient for firm size was both statistically significant and
positively inclined (β = 0.003, p = 0.028 < 0.05). This signifies that an improvement of one unit in
firm size corresponds to a significant 0.003-unit improvement in profitability. whereas results
pointed out that the coefficient for the lending rate was both statistically significant and positively
oriented (β = 0.001, p = 0.048 < 0.05). In practical terms, this suggests that a one-unit increase in
the lending rate results in a noteworthy 0.001-unit enhancement in profitability. In summary, this
study highlights the intricate web of financial factors that impact the profitability of deposit-taking
SACCOs. It underscores the paramount importance of financial soundness and prudent financial
management in these cooperative societies. Additionally, the study emphasizes the need for
ongoing research endeavors, specifically focusing on the infrastructural capabilities and
performance financially of these entities. Such research can offer valuable insights for
policymakers, practitioners, and stakeholders in the financial sector, ultimately contributing to the
growth and sustainability of deposit-taking SACCOs. | en_US |