FINANCIAL INCLUSION AND PERFORMANCE OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN MERU COUNTY, KENYA
Mercy Wanjiru Ndegwa - Master of Business Administration (Finance), Kenyatta University, Kenya
Jeremiah Koori - Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
It has been widely acknowledged that financial exclusion is strongly related with poverty conditions in an economic system translating into poor financial performance among financial institutions. On the other hand, financial inclusion through agency banking, mobile money services and credit facilities act as alternative channels of revenue generation which improve performance of these institutions. Despite this, most Deposit Taking SACCOs seems not to have clearly understood the benefits that would accrue in consideration of financial inclusion. This is seen from the fact that majority of Deposit Taking SACCOs have concentrated their branch networks in urban centers which means that adults living in most rural areas do not access formal financial services at a cost-effective way. The main objective of the study was to determine the effect of financial inclusion on performance of Deposit Taking Deposit Taking SACCOs in Meru County. The study was guided by the following objectives; to determine the effect of financial literacy on performance of Deposit Taking SACCOs in Meru County, Kenya, to examine the effect of diversified credit facilities on performance of Deposit Taking SACCOs in Meru County, Kenya, to establish the effect of mobile money transfer services on performance of Deposit Taking Deposit Taking SACCOs in Meru County, Kenya and to investigate the effect of agency banking services on performance of Deposit Taking SACCOs in Meru County, Kenya. The study was supported by the following theories; technological acceptance model, financial intermediation theory and agency theory. The study adopted descriptive research design. The study targeted 186 staffs from the top management level of the 10 Deposit Taking SACCOs in Meru County. The staffs was drawn from the following departments; finance, marketing, operations and human resource. Since the population was small, a census was adopted. Data was collected using semi-structured self-administered questionnaires that will be administered through drop and pick later method. The data collected was analyzed using both descriptive and inferential statistics with the aid of SPSS. The study was important to the senior management team of the Deposit Taking SACCOs in Meru County, SASRA, the Central Bank of Kenya, future scholars and academicians. For the management of SACCOs, the study will offer recommendations on how best to improve on financial inclusion and thus increasing their performance. SASRA is a regulator of deposit taking Deposit Taking SACCOs in Kenya and thus it will rely on the findings of the study to formulate sound and effective policies that encourage financial inclusion and thus overall performance of the SACCO subsector. The study established that financial literacy services, diversified credit facilities, mobile money transfer services and agency banking services had a positive effect on the performance of DT SACCOs. It was concluded that the SACCOs had to a significant extent embraced financial inclusion which led to improved client base and financial resources management and substantially offered diverse credit facilities which had improved their income, volume of loans and variety. It was further concluded that most of the SACCOs have embraced mobile money transfer services and also agency banking services were to a high extent embraced by Deposit Taking SACCOs in Meru County and contributed significantly to financial inclusion and performance. The study recommends that the Deposit Taking SACCOs in Meru County need to enhance stakeholders in rolling out financial literacy programs to increase access and appreciation of the services.
