Membership and financial performance: a survey of selected savings and credit co-operative societies in Kenya
Kosiba, Joash O
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Membership role in SACCOs have never been clearly linked to their financial performance despite the fact that poor financial performance can result into mass withdrawal of members and lead to total collapse of tbe sub-sector. This may trigger financial sector crisis in Kenya since SACCOs hold a substantial part of the savings portfolio. The specific objectives of the study were 10: determine the role of membership in financial performance of SACCOs in Kenya; assess the effects of changes in regulatory framework on the financial performance of SACCOs Kenya; and draw policy implications on the findings of the study. This study used panel data covering the period 2006-2010 consisting of annual cross-sectional observations on membership, total assets, total loans, total debts, number of branches, return on assets, and SACCO scale. The analysis of data involved obtaining the descriptive statistics of all variables and examining their trends. This was followed by Fixed Effect model linear estimation to assess the relationship between the dependent and independent variables. The results showed that the co-efficients of membership and branch variables are statistically significant. This implies that membership and branch variables explains changes in financial performance of deposit-taking SACCOs in Kenya. The co-efficients of other variables: deposit ratio; loan ratio; SACCO scale; external borrowing/debts ratio; and time factor were all found to be statistically insignificant. These varibales therefore does not explain financial performance of deposit-taking SACCOs Kenya.