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Lending Decision, Sacco Size And Liquidity Of Farmers Based Deposit-Taking Saccos In Kenya

Author

Listed:
  • GACHENGA, John Ndung’u

    (The Co-operative University of Kenya, Nairobi, Kenya.)

  • KINYARIRO, Dickson Kamau

    (Accounting and Finance Department, The Co-operative University of Kenya, Nairobi, Kenya.)

  • WAMBU, Charles Kamau

    (School of Cooperative and Community Development, The Co-operative University of Kenya, Nairobi, Kenya.)

  • MAINA, Justus Nderitu

    (Accounting and Finance Department, Catholic University of Eastern Africa, Nairobi, Kenya.)

Abstract

Kenyan farmers' Deposit-taking Savings and Credit Co-operatives (DT-SACCOs) have seen a drop in credit provision, from 9.6 % in 2022 to 5.2 % in 2023. Additionally, 52 % of these SACCOs have been declared illiquid due to imprudent lending practices. This has led to the closure or license revocation of 33 % of farmers-based DT-SACCOs. To address this issue, the study aimed to assess the moderating effect of SACCO size on the relationship between lending decisions and liquidity of farmers-based DT-SACCOs. The study employed an explanatory research design and utilized self-administered questionnaires. The study findings indicate that SACCO size significantly moderates the relationship between lending decisions and liquidity of farmers-based DT-SACCOs. As a recommendation, SACCOs should consider their size when making lending decisions, allowing larger SACCOs to manage more risk in loans to farmers, while smaller SACCOs may need to exercise more caution.

Suggested Citation

  • GACHENGA, John Ndung’u & KINYARIRO, Dickson Kamau & WAMBU, Charles Kamau & MAINA, Justus Nderitu, 2023. "Lending Decision, Sacco Size And Liquidity Of Farmers Based Deposit-Taking Saccos In Kenya," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 27(3), pages 57-70, September.
    • Handle: RePEc:vls:finstu:v:27:y:2023:i:3:p:57-70
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    More about this item

    Keywords

    credit risk; asset-liability management; financial services; African countries;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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