Abstract:
Amongst most salaried Kenyans, personal financial development is achieved through SACCOs
especially since they are not only more affordable but also due to the fact that they are easily
accessible by the majority. This study sought to examine the factors that affect the financial
performance of employee Savings and Credit Co-operative Societies with specific regards to
Interest rates charged, attitude towards risk, amount of loan desired and the savings mobilized.
The study design was descriptive in nature and the research used a sample of 225 respondents
from a combined population of 450. The study was conducted in two SACCOs: Pesa SACCO
and KWA SACCO. Ordinary Least Squares regression analysis was carried out on the data using
STATA 12. The research yielded a positive and significant relationship between the financial
performance of SACCOs and all independent variables except interest rates. This shows that that
the issue of interest rates should be approached with caution since inasmuch as an increase in
interest rates may increase the financial performance of financial institutions, it might as well
cause other results such as decreased demand for loans, negating the profitability of SACCOs.
The study recommended that SACCOs should institute measures to improve their customers’
attitude towards risk, amount of loan desired, and the value of savings mobilized since these
three have a positive impact on financial performance. A deeper investigation into the particular
circumstances of every SACCO should be carried out before interest rates are increased.
