The effect of SASRA regulatory framework on the financial performance of savings and credit co-operatives in Kenya
The government of Kenya in 2008 established legislation to streamline operations of the SACCO sector which has much potential and contributes immensely to the GDP of the country but was previously plagued with mismanagement and misappropriation of members savings. The enactment of the SACCO act of 2008 which established the SACCO society regulatory authority was aimed at specifically regulating a sector which lacked a harmonized legal framework. This study sought to establish the effect of regulation on the financial performance of SACCOs in Kenya. The Sample size for the study was 35 SACCOs. Questionnaires were used to obtain important information about the population in terms of effects on the financial operations on the SACCOs prior to and after introduction of regulations. Secondary data in form of financial statements for the period before and the period after introduction of regulations were also compared. Financial projections in the 5 year business plans submitted to SASRA as a mandatory requirement were also examined. After receiving questionnaires from respondents and copies of financial statements, responses were edited, classified and coded to analyze quantitative data using Statistical Package for Social Science (SPSS Version 17). Tables and charts were used for further representation for easy understanding and analysis. Data collected was thoroughly examined and checked for completeness and comprehensibility. The data was then summarized, coded and tabulated. Inferential Statistic Was used to establish the effect of regulation on the financial performance of SACCOs. From the findings the study concludes that regulation has had a positive effect on the financial performance of SACCOs. The Study established that improvement in financial performance is attributed to the positive fundamental changes in the regulatory framework which amongst other things has ensured professional management of SAC COs, restored confidence in the sector, created a cushion for Members through spelling out protection measures on their deposits and has also offered guidance on capital adequacy and credit management.