Abstract:
This study sought to establish the determinants of financial performance of
SACCOs in the banking sector in Kenya. In Kenya, fifty one percent of all
registered SACCOs are non-operational; however, all SACCOs in the banking
sector in Kenya are operational despite the many employment perks given to
staff. The determinants studied were competition from commercial banks,
internal politics, operation costs, saving culture and investment policies. This
study adopted a descriptive survey design. The target population of this study
was SACCOs in the banking sector in Kenya. The sampling frame of this study
was derived from the database of the Ministry of industrialization and
enterprise Development which regulates and licenses SACCOs in Kenya.
Stratified sampling and simple random sampling was used. A Likert scale
questionnaire was used to gather primary information while a secondary data
collection sheet was used for collecting secondary information regarding
SACCO performance. Information was sorted, coded and input into the
statistical package for social sciences (SPSS) version 21.0 for production of
graphs, tables, descriptive statistics and inferential statistics. The results
indicated that there was a positive relationship between financial performance
and competition from commercial banks, internal politics, operating costs,
saving culture and investment policy. The study concluded that all the variables
under study are statistically significant in explaining the financial performance
of SACCOs in the banking sector in Kenya. The study recommends that the
SACCOs should; be proactive in order to have a competitive advantage, have
effective strategic plans to manage operating costs and enhance investment
through effective policies.
