Does Size Moderate the Linkage between Corporate Governance and Financial Performance? Evidence from Deposit Taking Sacco’s in Kenya

Deposit-taking Savings and Credit Cooperative Societies (SACCOs) are pivotal institutions in Kenya, facilitating financial inclusion and economic development by providing accessible savings and credit services. Despite their critical role, SACCOs face challenges such as governance deficiencies and regulatory compliance issues, which impact their financial performance (FP). This study employed a descriptive correlational design to investigate the interrelationships among corporate governance (CG), regulatory frameworks, and. Utilizing data from 815 SACCOs spanning the period from 2018 to 2022, collected through annual financial reports and supervisory data from the Sacco Societies Regulatory Authority (SASRA), the research reveals significant findings. The fixed effect panel regression model applied shows that CG positively influences FP, indicating that stronger governance practices enhance financial outcomes. Moreover, regulatory frameworks exert a substantial impact on FP, underscoring their role in ensuring financial stability. Importantly, the interaction between CG and regulatory frameworks further enhances FP, highlighting the synergistic effect when robust governance practices align with effective regulatory oversight. These findings underscore the critical role of regulatory frameworks in strengthening the CG-FP nexus within SACCOs, offering implications for enhancing management practices and regulatory strategies to sustain financial stability and bolster member confidence. Future research endeavors should expand to include a broader spectrum of SACCO types and consider longer study durations to deepen insights into governance dynamics and financial outcomes across the sector.