Asset and Liability Structure on Investment Performance of Deposit Taking Savings and Credit Cooperatives in Nairobi City County, Kenya
DOI:
https://doi.org/10.58425/ajfbm.v2i1.161Keywords:
Assets, liabilities, investment performance, deposit taking SACCOsAbstract
Aim: Similar to conventional financial organizations, deposit taking SACCOs rely on assets to generate better returns, improving their financial stability and, consequently, their profits. Inadequate assets have also meant that deposit taking SACCOs sometimes proved unable to service externally procured debts. This affirms that the asset and liability ratio of deposit taking SACCOs is critical for them to succeed. It implies that nexus subsists amongst asset and liability structure and investment performance of the SACCOs. The main objective of this study was to establish the influence of asset and liability structure on investment performance of deposit taking SACCOs in Nairobi County, Kenya.
Methods: The study utilized a causal research design. The target population for this study was 42 licensed deposit-taking SACCOs in Nairobi County, Kenya. The study was a census of all deposit taking SACCOs in Nairobi City County. Additionally, this research utilized secondary panel data that was retrieved from annual reports of the SACCOs from 2017 to 2021. The study used descriptive statistics in the data analysis. Additionally, inferential statistics which included correlation and regression were used in the data analysis.
Results: The findings showed that fixed assets and currents assets have a significant positive effect on investment performance of SACCOs in Nairobi County while short-term liabilities and long-term liabilities have significant negative effect on investment performance of SACCOs in Nairobi County. The results also showed that fixed assets have a positive and significant effect on the ROI.
Conclusion: Fixed assets like land & buildings, properties and equipment increase the wealth of the SACCOs, and have a significant impact on their investment performance.
Recommendations: The management of deposit-taking SACCOs should increase investments in fixed assets including land, buildings, and equipment since they increase return on investment. Instead of leasing, the DT-SACCOs management can buy the fixed assets. To manage their cash flows, particularly those from account receivables and account payables, the management of DT-SACCOs should continuously guarantee they develop cash budgets and maintain a cashbook.
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