| dc.description.abstract | Savings and Credit Cooperative Societies (SACCOs) have been recognized as critical avenues for economic growth in most countries of the world. Many countries that have achieved economic development have a cooperative sector featuring widespread vibrancy and dynamism. In the present years however, globalization, banking sector regulations and competition has clip into this sector in a very fast rate. The objective of this study was to establish the determinants of financial performance of deposit taking SACCOs in Nairobi County. The specific objectives includedasset quality, capital adequacy, operational efficiency and liquidityon financial performance of deposit taking SACCOs in Nairobi County.Capital Asset Pricing Model Theory, Liquidity Preference Theory and Agency Theory informed the study.Panel research design was used in this study. Panel research design is best suited since panel data was used. The study conducted a census of the all the 39 SACCOs in Nairobi County. The study used secondary quantitative data from SASRA registry comprising of audited financial statements and monthly reports submitted by the deposit-taking SACCOs. This study used formal statistical hypothesis test to check for Normality, Multicollinearity, Hausman Specifications Test, Wooldridge Test for Serial Correlation and Heteroscedasticity.The study employed a dynamic panel data regression model. The descriptive statistics was presented in mean, median, standard deviation and proportions while the inferential statistics includes diagnostics tests, Pearson correlation and multiple linear regression model. The multiple linear regression models used to measure the relationship between the independent variables and the dependent variable that are explained in the model.A critical p value of 0.05 was used to determine whether the overall model was significant or not. The study established that Capital adequacy was found to be positively but insignificant related to financial performance of deposit taking SACCOs. Asset quality was found to be positively and significant related to financial performance of deposit taking SACCOs. Operational efficiency was found to be positively and significant related to financial performance of deposit taking SACCOs. Liquidity was found to be positively and significant related to financial performance of deposit taking SACCOs.The study concludes that there is a strong correlation between capital adequacy, asset quality, operational efficiency and liquidity on financial performance of deposit taking Sacco‟s. The study recommended on adoption of this management practice will ensure performance of SACCO‟s and improve investor‟s confidence since all will be assured of SACCO‟s going concern status. Secondly, all SACCO‟s should continuously develop customized loan products which will diversify their sources of income and minimize operational costs. | en_US |
