INVESTMENT STRUCTURE AND FINANCIAL PERFORMANCE OF TIER ONE DEPOSIT TAKING SAVINGS AND CREDIT CO-OPERATIVES IN KENYA
INVESTMENT STRUCTURE AND FINANCIAL PERFORMANCE OF TIER ONE DEPOSIT TAKING SAVINGS AND CREDIT CO-OPERATIVES IN KENYA
Amos Kirop Komen - Degree of Master of Science in Finance, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Richard Ngali. PhD, CFE - Lecturer, Jomo Kenyatta University of Agriculture and Technology, Kenya
Dr. Joshua Matanda. (PhD) - Senior Lecturer, Jomo Kenyatta University of Agriculture and Technology Kenya
ABSTRACT
The study aimed to establish the influence of investment structure on financial performance of Tier One Deposit taking Savings and Credit Cooperative Societies (DTSACCOs) in Kenya. The specific objectives explored the effect of interest on loan portfolio, accounts income, unit trust investment and stocks investment on financial performance of Tier One DT-SACCOs in Kenya. The theories that anchored the study comprised the Ansoff diversification Matrix, financial theory of investment, Pecking Order Theory and Resource Based View theory. The target population research was 42 the Tier One DT-SACCOs in Kenya as per SASRA 2023 report. The study used census method due to the small number of the Tier One DT-SACCOs in Kenya. The study relied on secondary data that was collected through the use of a data collection sheet. The data collected was for five (5) years from 2018 to 2022. The raw data collected was coded prior to been input into Statistical Package for Social Sciences (SPSS) software. The data collected was mainly quantitative and it was analyzed descriptively and inferentially. Mean scores, percentages, minimum, maximum and standard deviations accurately served this purpose. The relationship between independent variables was measured through multiple regression analysis, in order to find out the inter-relationship between the four independent variables and their influence on the dependent variable. The study found that interest on loan portfolio, accounts income, unit trust investment and stocks investment have a positive and significant effect on the financial performance of Tier One-SACCOs. A study conclusion was made that investment structure positively influences the financial performance of Tier One-SACCOs. The study established that Unit trusts funds are essential in the growth of financial institutions through mobilizing savings, mobilizing direct investment, capital allocation and risk management. The study further concludes that investment in equity investment, bond investments is a safe investment avenue for return on assets over long holding time periods. The study recommends that SACCOs should develop mechanisms that would make it favorable for them to leap the benefits of interests charged on loans. The study recommends that Tier One SACCOS should continue improving on their accounts income by investing excess funds on fixed asset portfolio. Investment in unit trusts can be improved through financial innovation especially by leveraging on technology to venture into new products into the market. Diversification into the stocks for the Tier One DT-SACCOs should translated to reduced unsystematic risks and thereby improved profitability measured by ROA. Further comprehensive research should be conducted incorporating major financial institutions like banks, MFIs, Insurance companies and other SACCOs categories in Kenya with an aim of providing an all-inclusive analysis of these relationship in the entire financial sector. Also, study should be carried out using both primary and secondary data that covers a longer period to check for the changes in the influence of investment structure on financial performance of financial institutions in Kenya from time to time .
