Abstract:
Deposit Taking Sacco sector significantly contributes to financial industry, and further contributing the country’s GDPN. Non-Performing Loans (NPLs) of these SACCOs is in constant rise inhabiting internal growth and affecting liquidity inaddtion, hindering smooth running of the operations of these institutions. Management practices is one of the avenues that can impact on the debt levels of a SACCO. This study sought to find out the effect of Management Practices measured by Restructuring, Guarantee Policies, Monitoring Practices and Loan Recovery on NPLs in deposit taking savings and credit cooperatives in Kenya. The Stakeholder Theory, the Shareholder Theory and Acceleration Theory forms the theories the study was anchored on. Descriptive analysis was employed to the study for efficiency purposes. A structured questionnaire aided in collecting data. Excel, SPSS and AMOS statistical tools aided in the various aspects of data analysis. Regression Analysis is the framework of the Hypothesis testing that was used in this study. Multiple regression results analyzed established that each of the four measures of Management Practices had positive significant effect on NPLs. Thus, SACCOs that are efficient in Restructuring, Monitoring, Recovery and Credit Guarantee realize positive NPL outcomes (reduced number and total amount). Furthermore, Moderated Multiple Regression analysis establish that SACCO Size has a significant enhancing effect on the relation between Management Practices and NPLs. The study thus concluded that loan restructuring, guarantee practices, credit monitoring and credit management practices are critical determinant of NPLs in SACCOs for both small and large SACCOs. Good levels of NPLs can be achieved to ensure that SACCOs’ asset quality should not deteriorate. SACCOs to consistently improve their efficiency and effectiveness in restructuring NPLs, Monitoring Credit, strengthening Guarantee policies and Recovery. The aims of the DTs can therefore play significant catalyst of development when they truly achieve sustainable NPLs levels in these institutions.
