Influence of Credit Risk Supervision Strategies on Financial Performance of Deposit-Taking SACCOs in Mombasa County, Kenya

Authors

  • Fatma Hassan Shariff Hashim Technical University of Mombasa
  • Dr. Banafa Abdulkadir Ali Technical University of Mombasa
  • Dr. Wahida Bana Technical University of Mombasa

DOI:

https://doi.org/10.53819/81018102t5316

Abstract

The objective of the study was to investigate the influence of credit risk supervision strategies on the financial performance of Deposit-Taking Saccos in Mombasa County, Kenya.  The study was supported by the credit risk theory. The study adopted the descriptive research design. The target population included 109 participants from all the six-deposit taking SACCOs in Mombasa County. The stratified random sampling technique resulted into having 86 units of analysis. The study used primary data which was collected using questionnaires. The gathered data underwent decoding and analysis using the Statistical Package for the Social Sciences version 26. The study employed simple linear regression model in data analysis. The study found a strong positive correlation of 0.407 between credit risk supervision strategies and financial performance. Additionally, the results of the regression analysis indicated that credit risk supervision strategies explained more than 40.8% of the variability in the financial performance of the SACCOs in Mombasa County. The hypothesis testing led to the rejection of H01. The rejection of H01 confirmed that credit risk supervision strategies have a positive and significant influence on the financial performance of SACCOs in Mombasa County, Kenya. The study concludes that credit risk supervision strategies a significant role in enhancing the financial performance of the SACCO sector in Mombasa County, Kenya. The study recommends that deposit taking SACCOs in Mombasa County should prioritize the implementation of robust credit risk supervision strategies to enhance their financial performance. Additionally, SACCOs should invest in comprehensive employee training programs to ensure that their workforce is well-equipped to adhere to optimal lending practices and risk management protocols. The study also recommends that policy formulating and regulatory bodies such as SASRA should devise mechanisms and enforce policies which are geared towards enabling SACCOs to develop strategies which will enable them monitor their credit

Keywords: Credit risk supervision strategies, financial performance, deposit-taking saccos Mombasa County, Kenya

Author Biographies

Fatma Hassan Shariff Hashim, Technical University of Mombasa

Master student, Technical University of Mombasa, Kenya

P.O Box 90420-80100, Mombasa, Kenya

hasniyehassuni64@gmail.com

Dr. Banafa Abdulkadir Ali, Technical University of Mombasa

Lecturer, Technical University of Mombasa, Kenya

P.O Box 90420-80100, Mombasa, Kenya

ab.banafa@tum.ac.ke

Dr. Wahida Bana, Technical University of Mombasa

Lecturer, Technical University of Mombasa, Kenya

P.O Box 90420-80100, Mombasa, Kenya

banawahidamahmud@tum.ac.ke

References

Agustiani, R. (2020). Pengaruh Good Corporate Governance, Return on Asset, Return on Equity, Bopo, Dan Capital Adequacy Ratio Terhadap Nilai Perusahaan Go Public Di Bursa Efek Indonesia. Jurnal Ilmiah Ekonomi Bisnis, 21(2), 178-180.

Akhtar, I. (2016). Research Design (1st ed.). New Delhi: Jamia Millia Islamia.

Akinleye, G. T., & Olarewaju, O. O. (2019). Credit Management and Profitability Growth in Nigerian Manufacturing Firms. Acta Universitatis Danubius. Oeconomica, Equatorial Journal of Finance and Management Sciences, 3(1), 17-23.

Anjom, W. (2021). An Empirical Study on the Factors Affecting the Interest Rate Spread of Listed Conventional Commercial Banks of Bangladesh. European Journal of Business and Management Research. doi:10.24018/ejbmr.2021.6.5.1086

Aregu, A. H., & Tassew, A. W. (2018). The impact of investment diversification on the financial performance commercial banks in Ethiopia. Journal of Economic Literature,, Vol 3, Pages 41-55.

Byusa, V., & Nkusi, D. (2020). Effects of credit policy on bank performance in selected Rwandan Commercial banks. International Economic Journal, 2(6), 41-34., 2(6), 31-34.

Chebungwen, N., & Kwasira, J. (2020). An Assessment of Internal Control System on Financial Performance in Tertiary Training Institutions in Kenya: A Case Study of African Institute of Research and Development Studies. International Journal of Science and Research, 3(5), 571-573.

Cooper, D. R., & Schindler, P. S. (2019). Business Research Methods (13 ed.). New York, United States of America: McGraw-Hill Publication. doi:ISBN-13: 978-1260210019

Ehiedu, V., & Chika, I. P. (2022). Effect of corporate diversification strategies on the financial performance industrial goods in Nigeria. International Journal of Applied Research in Social Sciences, Vol 4(8), Pages 293-305. doi:DOI: 10.51594/ijarss.v4i8.390

Ho, C. F. (2019). A Preliminary Study on Credit Risk Management Strategies of Selected Financial Institution in Malaysia. J. Journal Pengurusan, 28 , pp. 45–6. https://doi.org/10.17576/pengurusan-2009-28-03

Kamotho, J. M., & Njoka, C. (2022). Credit lending policies and financial performance of Islamic banks in Kenya. International Academic Journal of Economics and Finance, 3(7), 488-510.

Kothari, C. R., & Garg, G. (2019). Research methodology: Methods and techniques (4th Multi Color ed.). New Delhi, India: New Age International (P) Limited Publishers. doi:ISBN: 978-93-86649-22-5

Kungu, J. N., Wanjau, L., Waititu, A. G., & Gekara, G. M. (2021). effects of credit policy on profitability of manufacturing firms in Kenya. Journal of Economics and Finance, 2(4), 1-7.

Lagat, F. K., Mugo, R., & Otuya, R. (2016). Effect of Credit Risk Management Practices on Lending Portfolio among Savings and Credit Cooperatives in Kenya. European Journal of Business and Management, 5(19), 93-105.

Li, R. (2023). Risk Management for Small Businesses: 7 Effective Strategies to Understand, Identify and Navigate Risks That Will Make or Break Your Business Paperback. Rhys Li Coaching. doi: ISBN-13 ‏ : ‎ 979-8218235093

Liao, Y. (2020). The impact of fair‐value‐accounting on the relevance of capital adequacy ratios in Taiwan. Journal of International Money and Finance, 39(2), 65-81.

Maina, J. N., Kiai, R. M., & Kyalo, T. N. (2020). Financial innovation practice, sacco size and financial sustainability of deposit taking saving and credit co-operatives in Kenya. Financial Studies, 22(89), 51-65.

Makau, M., & Jagongo, A. (2018). The Impact of Portfolio Diversification on Financial Performance of Investment Firms Listed at Nairobi Securities Exchange, Kenya. International Journal of Management and Commerce Innovations, Vol 5(2), Pages 177-187.

Mugenda, O. M., & Mugenda, A. G. (2013). Research methods: Quantitative and qualitative approaches. Nairobi Kenya: Act Press.

Muteti, S. (2014). Relationship between financial risk management and financial of commercial banks in Kenya. An Unpublished MBA Thesis Submitted to School of Business, University of Nairobi, Nairobi.

Rawal, Y. (2021, July 2). The importance of SACCOs in the Kenyan economy. Wakandi Group, 12. Retrieved from https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKE

SASRA. (2020). SACCO supervision Annual Report.

Downloads

Published

2024-04-26

How to Cite

Hashim, F. H. S., Ali, B. A., & Bana, W. (2024). Influence of Credit Risk Supervision Strategies on Financial Performance of Deposit-Taking SACCOs in Mombasa County, Kenya. Journal of Finance and Accounting, 8(4), 106–117. https://doi.org/10.53819/81018102t5316

Issue

Section

Articles

Most read articles by the same author(s)