Volume 4, Issue 1, March 2019, Page: 1-14
Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya
Everlyn Ninga Munene, Muchiri Ndambiri and Company Consulting Group, Nairobi, Kenya
James Muchiri Ndambiri, Muchiri Ndambiri and Company Consulting Group, Nairobi, Kenya
Stephen Muthii Wanjohi, Department Statistics and Actuarial Science, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya
Received: Oct. 26, 2018;       Accepted: Jan. 24, 2019;       Published: Feb. 28, 2019
DOI: 10.11648/j.ijafrm.20190401.11      View  251      Downloads  67
Abstract
Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.
Keywords
Portfolio, Unsecured Loan, Co-Operative’s
To cite this article
Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi, Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya, International Journal of Accounting, Finance and Risk Management. Vol. 4, No. 1, 2019, pp. 1-14. doi: 10.11648/j.ijafrm.20190401.11
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Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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