Ethnic Diversity and Financial Performance of Deposit-Taking Savings and Credit Co-Operative Societies in Nairobi County, Kenya
Abstract
Purpose: The DT-SACCOs have proved to be important in the development and growth of both individuals and economies. However, the overall financial performance of DT-SACCOs in Kenya has not been impressive. Between 2014 and 2018, there was general decline in return on assets and return on equity of DT-SACCOs. The average return on assets was 2.51% in 2014 and 2.25% in 2018. The average return on equity was 33.09% in 2014 and 21.89% in 2018. The study examined the effect of ethnic diversity on financial performance of Deposit-Taking Savings and Credit Cooperative Societies in Nairobi County.
Design/Methodology/Approach: Agency theory, stakeholder theory and resource dependence theory guided this study. Explanatory and correlational research designs were used. Descriptive and inferential analysis was conducted.
Findings: Ethnic diversity was found to insignificantly predict return on assets (β2 = -.158; p > 0.05) and return on equity (β2 = -.800; p > 0.05).
Implications/Originality/Value: The study concluded that ethnic diversity of board members negatively and insignificantly affects financial performance.
Downloads
Article Analytics Summary
References
REFERENCES
Barus, J. J. (2018). Effect of internal factors on financial performance of deposit taking savings and credit societies in Kenya (Doctoral dissertation). JKUAT-COHRED
Bijman, J., et, al. (2012). Support for farmers' cooperatives. Retrieved November 10, 2021, from https://library.wur.nl/WebQuery/wurpubs/fulltext/245008.
Bwana, K. M. & Mwakujonga, J. (2013). Issues in SACCO’s development in Kenya and Tanzania: The historical and development perspectives. Developing Country Studies, 3(5), 114-121.
Creswell, J. W. (2008). Educational Research: Planning, Conducting and Evaluating Quantitative and Qualitative Research (3rd Ed.). Upper Saddle River, NJ: Pearson Education, Inc.
Garson, G.D. (2012). Testing statistical assumptions. Retrieved from http://www.statisticalassociates.com/assumptions.pdf.
Gweyi, M. O., & Karanja, J. (2014). Effect of financial leverage on financial performance of deposit taking savings and credit co-operative in Kenya. International Journal of Academic Research in Accounting, Finance and Management Sciences, 4(2), 180-188.
Hayes, A.F. (2018). Introduction to mediation, moderation and conditional process analysis: A regression-based approach (2nd ed.). New York, London: The Guilford Press.
Heale, R., & Twycross, A. (2015). Validity and reliability in quantitative studies. Evidence-based Nursing, 18(3), 66-67. DOI: https://doi.org/10.1136/eb-2015-102129
Hillman, A. J., Withers, M. C., & Collins, B. J. (2009). Resource dependence theory: A review. Journal of Management, 35(6), 1404-1427. DOI: https://doi.org/10.1177/0149206309343469
Hughes, J. A., & Sharrock, W. W. (2016). The Philosophy of Social Research. Routledge. DOI: https://doi.org/10.4324/9781315840710
Jensen, M.C., & Meckling, W.H. (1976) Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. DOI: https://doi.org/10.1016/0304-405X(76)90026-X
Johl, S. K., Kaur, S., & Cooper. (2015). Board characteristics and firm performance: Evidence from Malaysian public listed firms. Journal of Economics, Business and Management, 3, 239-243. DOI: https://doi.org/10.7763/JOEBM.2015.V3.187
Jones, T. M., Wicks, A. C., & Freeman, R. E. (2017). Stakeholder theory: The state of the art. The Blackwell Guide to Business Ethics, 17-37. DOI: https://doi.org/10.1002/9781405164771.ch1
Kahuthu, D. G. (2016). Impact of prudential regulation on financial performance of deposit taking savings and credit cooperative societies in Kenya (Doctoral dissertation, COHRED), JKUAT.
Kivunja, C., & Kuyini, A.B. (2017). Understanding and applying research paradigms in educational contexts. International Journal of Higher Education, 6(5), 26-41. DOI: https://doi.org/10.5430/ijhe.v6n5p26
Kumburu, N.P., Pande, V. & Buberwa, E. (2012). Agency Theory and Performance of Savings and Credit Co-operative Societies (SACCOS) in Kilimanjaro Region: The Case of Selected SACCOS in Moshi Municipality. Moshi Cooperative University.
Langevoort, D. C. (2016). Puzzles about Corporate Boards and Board Diversity. North Carolina Law Review, 89(4), 841 - 53.
Mathuva, D. M. (2016). Drivers of financial and social disclosure by savings and credit cooperatives in Kenya: A managerial perspective. Journal of Co-operative Organization and Management, 4(2), 85-96. DOI: https://doi.org/10.1016/j.jcom.2016.08.001
Mitnick, B. M. (2015). Agency theory. Wiley Encyclopedia of Management, 1-6. DOI: https://doi.org/10.1002/9781118785317.weom020097
Mokua, V.O. (2015). Factors influencing financial performance of deposit-taking savings and credit co-operative societies in Kisii County, Kenya. University of Nairobi.
Motompa, D.K. (2016). Factors influencing growth of saving and credit cooperative societies in Kenya: A case study of Kajiado East Sub- County (Dissertation). Management University of Africa, Kenya.
Mugenda, O M., & Mugenda, A. G. (2013). Research methods: Quantitative and qualitative approaches. Nairobi, Kenya: Acts Press.
Munisi, G. H., & Mersland, R. (2016). Ownership, board compensation and company performance in sub-Saharan African countries. Journal of Emerging Market Finance, 15(2), 191-224. DOI: https://doi.org/10.1177/0972652716645893
Mwendia, R.M. (2018). Corporate governance practices and financial performance on deposit-taking savings and credit co-operatives in Nairobi City County, Kenya (Masters project). Kenyatta University, Nairobi, Kenya.
NCSS Limited Liability Company. (2016). Chapter 305: Multiple regression. Retrieved November 09, 2021, from https://ncss-wpengine.netdna-ssl.com/wp-content/themes/ncss/pdf/Procedures/NCSS/Multiple_Regression.pdf
Odero, J.A., & Egessa, R. (2021). Towards realization of board gender diversity in deposit taking SACCOs in Kenya: A critical review and synthesis. International Journal of Science and Management Studies (IJSMS), 4(5), 172-182. DOI: https://doi.org/10.51386/25815946/ijsms-v4i5p114
Ogboi, C., Opemipo, A.V., & Enilolobo, O.S. (2018). Corporate board diversity and performance of deposit money banks in Nigeria. International Journal of Humanities and Social Science, 8(1), 112-120.
Olando, C. O. (2012). An Assessment of financial practice as a determinant of growth of Savings and Credit Co-operative Societies wealth in Kenya: The case of Meru County. Nairobi, Kenya. Kenyatta University.
Omwenga, J.O. (2017). Effect of corporate governance on financial performance of large tier Savings and Credit Cooperatives in Kenya (Master’s project). University of Nairobi, Nairobi, Kenya.
Pfeffer, J., & Salancik, G.R. (1978). The external control of organizations: A resource dependence perspective. New York, USA: Harper and Row.
Sacco Societies Regulatory Authority-SASRA (2018). The SACCO supervision annual report 2017. Nairobi, Kenya.
Sacco Societies Regulatory Authority-SASRA (2019). The SACCO supervision annual report 2018. Nairobi, Kenya.
Shah, S.R., & Al-Bargi, A. (2013). Research paradigms: Researchers’ worldviews, theoretical frameworks and study designs. Arab World English Journal, 4(4), 252 -264.
Ujunwa, A. (2012). Board characteristics and the financial performance of Nigerian quoted firms. Corporate Governance: The international journal of business in society, 12(5), 656-674. DOI: https://doi.org/10.1108/14720701211275587
Wambui, K. (2018). Influence of board diversity on the financial performance of commercial banks in Kenya. Strathmore Business School, Strathmore University, Kenya.
Wangui, G.K. (2019). Influence of corporate governance on performance of SACCOs in Nairobi County (Master’s project). United States International University – Africa, Nairobi, Kenya.
Wanyama, F.O. (2013). Cooperatives for African development: Lessons from experience. School of Development and Strategic Studies, Maseno University, Kenya.
Copyright (c) 2021 Maurice Owalo, Frederick Ndede, Gerald Atheru
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
CSRC Publishing and JAFEE adhere to Creative Commons Attribution-Non Commercial 4.0 International License. The authors, submitting and publishing in the Journal of Accounting and Finance in Emerging Economies published by CSRC Publishing, retain the copyright of their work and give the journal right to publish their work agreeing to the licensing policy under Creative Common Attribution-Non Commercial (NC-BY-NC 4.0) International. Under this license, the published authors let others remix, tweak, and build upon their work non-commercially. Yet all the other authors using the content of CSRC Publishing are required to cite author(s), journal name and publisher in their work. CSRC Publishing and JAFEE follow an Open Access Policy for copyright and licensing.
