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Determinants of Technical Inefficiency of Saccos in Kenya: A Net Operating Cash Flows Output Slack Analysis

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  • Leonard Rang’ala Lari
  • Philip Mulama NYangweso
  • Lucy Jepchoge Rono

Abstract

Purpose: The purpose of this study was to evaluate the determinants of technical inefficiency of Saccos in Kenya. Methodology: The explanatory research design was utilized. The financial statements data was collected from a census of 46 audited deposit taking Saccos and methods used included estimation of technical inefficiency by employing a non-parametric DEA method while the second step concerned determination of inefficiency using parametric SFA. The log truncated panel data was used for a period of 8 years (2007-2014). Result: All the predictors jointly influence inefficiency and are significant except for prime regressors given NOCF slack as hypothesized in agency, efficiency and intermediation theories. NOCF slack regression reflects lack of managerial influence as indicated by Gamma (1.13E-23) while DEA result of all Saccos indicated 0.976 mean efficiency. Contribution to policy and practice: The NPTA, CA and FI predictors had significant influence on pure technical inefficiency, thus apt for decision making.

Suggested Citation

  • Leonard Rang’ala Lari & Philip Mulama NYangweso & Lucy Jepchoge Rono, 2017. "Determinants of Technical Inefficiency of Saccos in Kenya: A Net Operating Cash Flows Output Slack Analysis," Asian Journal of Economics and Empirical Research, Asian Online Journal Publishing Group, vol. 4(2), pages 49-60.
    • Handle: RePEc:aoj:ajeaer:v:4:y:2017:i:2:p:49-60:id:230
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    Cited by:

    1. Wanye Cheng & Sang Woo Hahm, 2019. "The Relationship Between Job Uncertainty and Job Satisfaction: The Moderating Effect of Charismatic Leadership, Organizational Communication, and Self-Efficacy," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(5), pages 338-346, August.

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