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Shaai Ledama Bornfas - Master of Science in Commerce (Finance and Accounting Option), KCA University, Kenya

Dr. Charles Githira - KCA University, Kenya


Financial sector firms normally tend to exhibit a higher level of financial intermediation efficiency than firms in other sectors due to their ability to transform savings received primarily from household economic units into credit or loans for companies and others to invest in buildings, equipment and other capital goods. Therefore, by enhancing their efficiency, commercial banks are in a position to offer their financial services more effectively. SACCOs in Kenya play a very significant role in financial intermediation as savings through them translates to around 48.55% of the gross national savings. However, despite these developments, SACCOs are still facing numerous challenges especially in terms of their overall financial structure. For example, there was an increase in the amount of non-performing loan ratio on SACCOS to 6.30 percent back in 2018 down from 6.14 percent of what had been reported in 2017.Therefore, the study bridged this research gap by examining the relationship between non-withdrawable deposits and financial intermediation efficiency of deposit taking SACCOs in Kenya. The study adopted a descriptive research design. The study target population was all 174 DT-SACCOs in Kenya. The study utilized secondary data taken from the financial statements submitted by each DTS to SASRA. STATA was used for data analysis. The research was based on balanced panel data from 2017 to 2021. The results also indicated that non-withdrawable deposits held had a negative but statistically significant effect on financial intermediation efficiency of DTS. It was concluded that an increase in the amount of non-withdrawable deposits tends to inhibit the financial intermediation efficiency of DTS. It was recommended that DTS in Kenya should strive to enhance their marketing capability so as to attract more customers and make their financial intermediation services more manageable by receiving non-withdrawable deposits from depositors and issuing out loans to creditors. It was also recommended that that policy makers in Kenya that are concerned with DTS regulation should ensure that that DTS across the country implement and adopt effective and sound financial structure decisions in order to enhance their financial intermediation efficiency and thus minimize the instances of DTS plunging into financial crisis that has caused many people across the country to lose a lot of money in the past.

Full Length Research (PDF Format)