EFFECTS OF LIQUIDITY-RISK MANAGEMENT PRACTICES ON THE FINANCIAL PERFORMANCE OF SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN KISII COUNTY, KENYA
Elikanah Mochama Osoro - Masters Student, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Willy Muturi - Jomo Kenyatta University of Agriculture and Technology, Kenya
ABSTRACT
Since the introduction of SASRA in 2008, a number of SACCOs have had their licenses canceled due to inadequate compliance to minimum liquidity requirements. In 2014 poor financial performance recorded by most SACCOs in Kenya led to cancellation of 44% of SACCOs operating licenses in Kisii County. The purpose of this study was to examine the effects of liquidity risk management practices on the financial performance of SACCOs in Kisii County. The objectives of the study were to determine the effects of asset quality management, capital adequacy and capital leverage practices on the financial performance of SACCOs in Kisii County. The study was directed by the theoretical concepts of capital adequacy, asset quality management and capital leveraging practices on the financial performance. A descriptive survey design was adopted. The target population was 20 respondents from five licensed SACCOs operating in Kisii County. The study sample size was 20 respondents selected from the population by census sampling technique. Primary data was collected using structured questionnaires. Secondary data was collected from the financial reports prepared by the SACCOs and SASRA. The study found out that Capital adequacy significantly affected ROA in SACCOs (p value = 0.001). Asset quality and capital leverage did not have a significant impact on saving mobilizations (p value = 0.574 and 0.338 respectively). The values for the regression equation for predicting the dependent variable from the independent variable was Y = 0.023 + 0.029X_1 - 0.012X_2 – 0.002X_3.
