The Impact of Core Capital and membership growth on financial performance of Deposit Taking SACCOS.

Abstract

Savings and Credit cooperatives commonly known as   Saccos’ are financial organizations formed by members with the same common bond to mobilize savings and later grant loans to the willing members. Prior to 2008 regulatory reforms which became operational in 2011, there was no conscious effort to regulate the subsector prudently because the organizations were not thought to pose any significant risk to the country’s financial system. However, the organizations expanded financially and started Front office services activity (FOSA - banking like services) in attempt to increase efficiency in services delivery to the members. In 2008, the government and the Sacco stakeholders formulated and legislated Sacco Societies Act 2008 and subsidiary deposit taking Sacco regulations of 2010. The null hypotheses sought to examine if Core Capital requirements and members retention had any significant impact on the deposit taking   Saccos’ financial incomes. The relevant literature was reviewed to ascertain the knowledge gap left by earlier scholars. The methodology of data collection was mining secondary data from Sasra data base and administration of questionnaires to various CEOs and chief finance manager who were knowledgeable on the subject. The data was the analysed using the statistical package for social sciences (SPSS) which either led to acceptance or rejection of null hypothesis. The study used census Survey design and a linear regression model to establish the influence of core capital and membership retention Sacco’s financial Position. It compared the Betas of various independent and dependent variables before the regulatory reforms and after. The study conclusions on the basis of findings revealed that core capital and membership growth have positive impact on Sacco’s financial performance.