The relationship between financial innovation and financial performance among Savings and Credit Co-operatives Societies in Nairobi County, Kenya
The study’s overall objective was to investigate whether there was a relationship between financial innovation and financial performance among the Sacco in Nairobi County. Financial innovation has been defined as a positive change in financial intermediation or financial system Juhakam (2003). Financial performance of Sacco’s has been measured using a combination of convictional accounting measures and risk and returns measures, further analysis of financial performance has used methodologies such as financial ratio analysis, bench marking, measuring performance against budget or combination of these. The study adopted descriptive research design for the purpose of assessing the study’s general intent. The study’s target population comprised of 41 Sacco registered under the commissioner for cooperatives in Nairobi County. Stratified random sampling was used to select respondents from each of the sampled Sacco. A self administered questionnaire was delivered to the respondents and collected after completion. Data was analyzed using SPSS version 16. The T- test, F-test and ANOVA was used to examine the data with the objective determining whether there is a significant relationship between financial innovation and financial performance among the Sacco in Nairobi County. From the finding the study concludes that Sacco adopted various types’ financial innovation that lead to financial performance, these include process innovation, product innovation, and institutional innovation. Institutional innovation had greatest impact on financial performance, followed by product innovation and last was process innovation. The study further concludes that there was a positive relationship between financial innovation and financial performance among Sacco in Nairobi County. The study recommend that for Sacco to be highly competitive and relevant in the market they must employ various types of financial innovation, emphasis also should be on education and training on various groups include members, staff of the Sacco, elective members of the Sacco, committee members, and managers of the Sacco, and government to support Sacco by creating laws which protect Sacco from exploitation from the market and Sacco to form alliance with other financial institutions in order to have economy of scale.