| dc.description.abstract | Financial structure is a concept that generally describes the manner in which a firm finances
asset through the combination of both debts, equity and any other hybrid security. “Financial
intermediation within the financial sector is very crucial in promoting financial services access
as well as ensuring the financial sector stability as a key component of the financial system.
Financial sector firms normally tend to exhibit a higher level of financial intermediation
efficiency than firms in other sectors due to their ability to transform savings received primarily
from household economic units into credit or loans for companies and others to invest in
buildings, equipment and other capital goods. Therefore, by enhancing their efficiency,
commercial banks are in a position to offer their financial services more effectively. SACCOs
in Kenya play a very significant role in financial intermediation as savings through them
translates to around 48.55% of the gross national savings. However, despite these
developments, SACCOs are still facing numerous challenges especially in terms of their overall
financial structure. For example, there was an increase in the amount of non-performing loan
ratio on SACCOS to 6.30 percent back in 2018 down from 6.14 percent of what had been
reported in 2017.Therefore, the study bridged this research gap by examining the relationship
between capital structure and financial intermediation efficiency of deposit taking SACCOs in
Kenya. The study adopted a descriptive research design. The study target population were all
174 DT-SACCOs in Kenya. Simple random sampling technique was adopted. The study
utilized secondary data taken from the financial statements submitted by each DTS to SASRA.
STATA was used for data analysis. The research was based on balanced panel data from 2017
to 2021. The study findings observed that leverage had a positive and significant effect on
financial intermediation efficiency of DTS operating in Kenya. The results also indicated that
non-withdrawable deposits held had a negative but statistically significant effect on financial
intermediation efficiency of DTS. Further, it was observed that share capital had a positive and
in significant effect on financial intermediation efficiency of DTS operating in Kenya. It was
concluded that maintaining high-level leverage is very crucial for deposit-taking SACCOs in
order to enhance their financial intermediation efficiency. It was also concluded that the
amount of share capital that a DTS has in terms of ordinary share capital, preference share
capital and reserves play a very crucial role in determining its overall financial intermediation
efficiency. It was recommended that DTS in Kenya should always ensure that they always
maintain high leverage level so as to ensure that they are able to diversify their investments as
well as helping them to set out a threshold for the expansion of their business operations. It was
also recommended that policy makers in Kenya that are concerned with DTS regulation should
ensure that that DTS across the country implement and adopt effective and sound financial
structure decisions in order to enhance their financial intermediation efficiency and thus
minimize the instances of DTS plunging into financial crisis that has caused many people
across the country to lose a lot of money in the past. | en_US |
