Influence Of Sasra Regulatory Framework On The Financial Sustainability Of Sacco’s In Nyeri County

ABSTRACT

The purpose of this study was to identify the influence that SASRA regulatory framework has on the sustainability of SACCOs in Kenya. Specifically the study aimed to establish the influence of the fit and proper test, loan management, financial reporting and investment requirements on the sustainability of SACCOs in Kenya. Competition for regulation theory, capture theory, agency theory, theory of growth of the firm, modern portfolio theory and prospect theory guided the study. The study adopted a descriptive survey design. The study targeted all the 13 deposit taking SACCOs in Nyeri County. Purposive sampling was employed in selecting 65 participants in the study. The researcher used a self-administered questionnaire as the data collection tool. Descriptive statistics in the form of frequencies and percentages was used to describe the findings. Multiple linear regression analysis was used to describe relationships within variables. Presentation of findings was done using tables, charts and graphs. The study found that SACCOs complied with all SASRA regulations to the letter. A significant relationship was found between loan management requirements and financial sustainability as well as between investment requirements and financial sustainability. The researcher concluded that SASRA regulation requirements have an influence on SACCO’s financial sustainability. The greatest effect is felt through the loan management and investment requirements. This is because guidelines from SASRA limited financial activities which were previously unregulated and which gave SACCOs an edge over the other players in the loans market. The researcher recommended that SASRA should relook at the regulation of interest rates since some SACCOs have shot up the interest rates of loans to the detriment of many customers. In addition, the researcher also recommended that SACCOs should consider investing in real estate which also have a high rate of return.