Effect Of Financial Restructuring On Operational Efficiency Of Savings And Credit Societies In Kenya

Abstract

The basic aim of this research was to examine the relationship between financial restructuring and operational efficiency of deposit taking savings and credit societies listed at Nairobi Securities Exchange (NSE). This study was carried out with general objective of examining the relationship between financial restructuring e.g. Debt restructuring, equity restructuring as well as deposit restructuring of financial firms listed in NSE. Debt restructuring, equity restructuring and deposit restructuring as independent variables while operational efficiency as dependent variable. Three theories were used loanable fund theory liquidity preference theory and perking order theory. The study used non-probability sampling whereas Purposive sampling was used to select the target sample of 50 desired financial institutions out of the population in Kenya. The study employed secondary panel data which was obtained from the annual reports, financial statements of listed financial firms. Interviews as well as observations from the sampled entities and from the Nairobi Securities Exchange websites for period between 2016 to 2021. The study used descriptive design. Multiple linear regression analysis was used to establish the relationship or lack of it. The link financial restructuring and operational efficiency of financial institutions listed in NSE has remained unresolved for some decades as most studies focused developed economies leaving at a disadvantage. Studies in developing economies had provided mixed findings on this subject a gap which this study had bridged. The study found that there was positive and significant linear relationship on equity, debt and customer deposit restructuring on operational efficiency The study record that a further study can be done to incorporate Sacco’s in east African community as well as non-deposit taking Sacco