| dc.description.abstract | The Savings and Credit Cooperative Societies (SACCO) in Kenya are today facing stiff
competition emanating from the mainstream banks, microcredit institutions, and recently,
digital credit, due to the modern-day technology, stringent regulatory requirements and the
dynamic customer demands. These have caused the declining membership in majority of
the cooperatives. Despite boasting of huge membership, their earnings cannot be compared
to those of commercial banks which post credible profits at the end on financial years.
Cooperative societies have therefore devised innovative ways in their operations to
enhance their competitiveness. The aim of this study was to investigate the effect of
financial innovation on the financial performance of cooperative societies in Kenya. The
specific objectives of the study were to examine the effect of product innovation on the
financial performance of cooperative societies in Kenya, assess the effect of service
innovation on the financial performance of cooperative societies in Kenya and to determine
the effect of process innovation on the financial performance of cooperatives in Kenya.
The study adopted a descriptive research design in which the population will be the 175
licensed deposit taking cooperatives by Sacco Society Regulatory Authority in Kenya. The
study samples 120 cooperative societies using simple random sampling and thereafter the
general managers from each of the selected cooperatives were selected purposively. The
study targeted the general managers of the cooperatives. Both primary and secondary data
were collected. Prior to actual data collection, the questionnaires were piloted for validity
and reliability. Data was analyzed using descriptive statistics namely percentages,
measures of central tendencies and frequency distribution. The researcher also used
multiple regression analysis to determine the relationship between the dependent and the
independent variables. The findings were presented in figures and tables. The study found
that all the contracts of financial innovation positively influenced the financial performance
of the SACCOs. The study found that the service innovation had the strongest influence
followed by process innovation. Among the innovations were the electronic funds transfer,
new deposit accounts, mobile banking, internet banking, automatic teller machines and the
front office service activity among others. The study therefore concludes that financial
innovation have positive effect on the financial performance of the cooperative societies.
The study recommended that the management of cooperatives should adopt more product
innovation, service innovation and process innovation to enhance the financial
performance of the societies. The study also recommended that the regulator should
formulate policies that will enhance use of financial innovation by the cooperative societies
such as use of incentives to encourage innovation or tax waiver on technology that
purchased by the societies for the purposes on enhancing their operations. Further, the
regulator should develop its surveillance structure to incorporate the adoption of financial
innovation by the societies particularly those struggling financially so as to boost their
efficiency and hence financial performance. | en_US |
