Published June 7, 2022 | Version v1
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FINANCIAL LEVERAGE AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN NAIROBI CITY COUNTY-KENYA

Creators

  • 1. Corresponding Author: Accounting and Finance Department, School of Business, Kenyatta University, Nairobi Kenya.
  • 2. Lecturers: Accounting and Finance Department, School of Business, Kenyatta University, Nairobi Kenya.

Description

Abstract: Statistical evidence from SASRA annual supervisory reports indicate a declining number of Deposit taking SACCOs especially after the introduction of SASRA regulation of 2012 on capital. This study sought to investigate the effect of financial leverage on financial performance of Sacco’s in Kenya. The objectives of the study were to determine the effect of debt to capital ratio, debt to equity ratio, short term debt ratio and short term debt ratio on financial performance of Sacco’s in Kenya. The study employed purpose sampling technique of the 30 Sacco’s out of the 42 available Sacco’s in Nairobi City County. The study was carried out between years 2012 to 2018 where secondary data was collected and used for this study. Causal research design was employed to determine the effect of the financial leverage on financial performance. Panel regression model was employed for analysis. Document review guide was used to extract information from the financial statements of the Sacco’s in Nairobi. Diagnostic test were carried out to meet the assumptions of the panel regression model. The study found out that debt to equity ratio had a statistically significant negative effect on financial performance, debt to capital ratio had a statistically significant negative effect on financial performance, long-term to total asset ratio had a statistically significant effect on financial performance, short-term to total asset had a statistically significant positive effect on financial performance. The study concluded that debt to equity, debt to capital and short-term to total asset are associated with financial performance of Sacco’s. The study recommends that Sacco’s should consider debt restructuring when it comes to capital structure, client management with the sole objective of achieving the vision 2030.

Keywords: Financial Leverage, SASRA, Return on Investment, Panel Regression Model.

Title: FINANCIAL LEVERAGE AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SAVINGS AND CREDIT CO-OPERATIVE SOCIETIES IN NAIROBI CITY COUNTY-KENYA

Author: Andrew Grohney Odondi, Ambrose Jagongo, Frederick W.S Ndede

International Journal of Management and Commerce Innovations 

ISSN 2348-7585 (Online)

Vol. 10, Issue 1, April 2022 - September 2022

Page No: 230-240

Research Publish Journals

Website: www.researchpublish.com

Published Date: 07-June-2022

DOI: https://doi.org/10.5281/zenodo.6619339

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Notes

International Journal of Management and Commerce Innovations (IJMCI), ISSN 2348-7585 (Online), Research Publish Journals (PUBLISHER), Website: www.researchpublish.com

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Paper Download Link (Source)
https://www.researchpublish.com/papers/financial-leverage-and-financial-performance-of-deposit-taking-savings-and-credit-co-operative-societies-in-nairobi-city-county-kenya

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