BRIDGING THE CREDIT GAP: CREDIT APPRAISAL AND LOAN UPTAKE AMONG MEMBERS OF DEPOSIT-TAKING SACCOs IN KENYA
BRIDGING THE CREDIT GAP: CREDIT APPRAISAL AND LOAN UPTAKE AMONG MEMBERS OF DEPOSIT-TAKING SACCOs IN KENYA
Ziro Wanje- Student, School Business, Economics and Tourism, Kenyatta University, Kenya
Dr. Salome Musau - Senior Lecturer, Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
The study objective was to examine the relationship between credit appraisal and loan uptake by members among deposit taking Co-operative Societies in Kenya. Generally, recent statistics reflects a positive trajectory on overall loan uptake, however quite a substantial part of the loans issued relates to defaulted loans as per SASRA (2022) report which has translated to liquidity challenges among DT-SACCOs. The study sought to examine the effect of credit appraisal on loan uptake by members of deposit taking Co-operative Societies in Kenya Specific objectives were determine the effect of capacity, collateral, credit scoring and character appraisal on a loan uptake to members in DT-SACCOs. Agency theory, credit risk assessment theory, theory of credit risk and the competitive pricing of default risk and information asymmetric theories were the main guide to this research. The target population was 177 recognized DT-SACCOs countrywide as per SASRA list of licensed DT-SACCOs for the year 2025. A sample size 53 DT-Sacco’s in Nairobi County was purposively selected. Primary data was collected using a semi structured questionnaire, Descriptive and inferential statistical tools were used for data analysis. The findings revealed that repayment capacity appraisal, Collateral appraisal, credit scoring appraisal had positive and significant effect on loan uptake However, character appraisal was found to have positive insignificant effect loan uptake suggesting that although it remains an important consideration during credit evaluation, it does not independently determine loan uptake among DT-SACCO members.
