Effect Of Investment Decision On Profitability Of Deposit Taking Savings And Credit Cooperatives In Nairobi County, Kenya

Abstract

This study sought to evaluate the effect of the expansion decision on the profitability of SACCOs in Nairobi County; to assess the effect of replacement decisions on profitability of SACCOs in Nairobi County; to evaluate the effect of renewal decision on the profitability of SACCOs in Nairobi County; and to assess the effect of research and development decision on the profitability of SACCOs in Nairobi County. This study intent was to determine how investment decision impact the profitability of SACCOs in Nairobi. The study population was the 40 DT- SACCOs in Nairobi County, Kenya. The independent variable for the study was investment decisions with four measures: investment in expansion decision, investment in replacement decision, investment in renewal decision and investment in research and development. Profitability (ROI) was the response variable which was the primary focus. The study utilised secondary data from 2018 to 2022 (4 years) on annual basis. A descriptive design together with multiple linear regression model were used for the analysis of the variables. For this analysis, the researcher used STATA software. The finding gave an R- square value of 0.189 approximately 18.9% of the variation in the dependent variable can be accounted for by the independent variables. Additionally, around 2.74% of the variation in the dependent variable can be attributed to differences between groups or categories, while overall, about 12.4% of the variation in the dependent variable remains unexplained. These analysis further revealed results show that the F statistic was substantial at 5% level with P=0.000. This shows that the model was suitable for the study to provide an explanation of the variables. The results also showed that investments in expansion and renewal decisions produced positive and statistically substantial values for this study while investments in replacement and research & development were found to be statistically insignificant determiners of profitability. This study recommends that measures should be put in place to enhance investment in expansion and renewal decisions. As this two have a substantial influence on profitability of DT-SACCOs in Nairobi.