Publication: Influence of current asset management on financial performance of selected savings and credit cooperative societies in Meru county, Kenya
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2024-06
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Mount Kenya University
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Abstract
Saccos were intended to provide a variety of financial services tailored to market demands
for their clients. To successfully offer these services, they needed a well-managed and
robust current asset’s structure, maintained by qualified personnel. Effective asset
management would enable Saccos to meet their obligations promptly. However, Kenyan
Saccos have faced issues with low liquidity ratios, struggling to maintain the required
15% monthly legal cashflow ratios, often relying on expensive bank loans for support.
The main aim of the study was to investigate how current asset management influences
the financial performance of savings and credit cooperative societies in Meru County,
Kenya. The specific objectives were to assess the impact of cash management, debtors’
management, short-term securities management, and inventory management on the
financial performance of these societies. The study applied pecking order theory to cash
and short-term securities management, contingency theory to debt management, and
resource-based view theory to inventory management. A descriptive research design was
chosen to gather data from 24 deposit and non-deposit Saccos in Meru County. The
sample included 42 customer care officers, 114 tellers, 93 back-office staff, and 120 loans
officers, totaling 369 respondents. Using a simple random sampling method, the study
selected 13 customer care officers, 34 tellers, 28 back-office staff, and 36 loans officers,
totaling 111 respondents. Both quantitative and qualitative data were collected using
closed-ended questionnaires and financial statements. A pilot study was conducted at
Unison Sacco in Isiolo County with a sample of 1 customer care officer, 3 tellers, 3 back-
office staff, and 4 loan officers. Reliability was assessed using Cronbach's alpha
coefficients, and validity was measured through face, content, and construct types. Data
analysis was performed using SPSS version 24, including both quantitative and
qualitative data from questionnaires and financial reports. Descriptive statistics such as
frequency, percentage, and mean were calculated. Diagnostic statistics including
normality, linearity, multicollinearity, and correlation tests were conducted to ensure data
suitability. Inferential statistics such as model summary, ANOVA, and regression
coefficients were also utilized. The findings were essential for Sacco management,
providing insights into how the management of various current assets—such as cash,
debtors, short-term securities, and inventory—can be optimized to enhance the liquidity
of the institutions.
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Keywords
Financial services, Asset management, Cashflow ratios, Inventory, Financial performance