Thesis:

Assessing effects of pearls on financial performance of deposit taking savings and credit co-operative societies in Kenya

Even though DT-SACCOs in Kenya work extremely hard, their financial performance is greatly impacted by deteriorating level of capital sufficiency, liquidity, and asset quality which adversely affects their financial performance significantly. It is still difficult for each DT-SACCO to fully comply with capital adequacy regulations, negatively impacting their financial performance. This has led to collapse of Five DT-SACCOs and licenses revoked. Notwithstanding, WOCCU has recommended the PEARLS framework to assist DT- SACCOS in mitigating credit risk management problems that are harming financial performance. In spite of an abundance of research on PEARLS and financial performance, conclusive findings about PEARLS's effect on DT-SACCOs' financial performance in Kenya remain to be seen. This because majority of empirical study have conceptual gaps while some have contextual gaps and methodological gaps in addition to inconsistent result. This suggests that the empirical evidence on the use of PEARLS among Kenyan DT-SACCOs for assuring financial performance. The current study assessed how the chosen PEARLS which were regarded as impacting on the financial performance of Kenyan DT-SACCOs in an effort to close the knowledge gap. The specific objective to guide the study has been to find out the effect of; protection, effective financial structures, asset quality, and liquidity affect financial performance of Kenyan Deposit Taking Savings and credit co-operative societies. The underlying theories were Financial Growth Theory, Risk Management Theory, Loanable Funds Theory, Modern Portfolio Theory, and Balanced Portfolio Theory. The research used a quantitative approach, which led to the adoption of the positivist paradigm and a correlational research design. The 181 DT-SACCOs that operated in Kenya between 2018 and 2022 were the target population. From this population a sample of 126 respondents was obtained using the formula by Yaman. A data collecting sheet was used to collect data from secondary sources. Content analysis and Cronbach's Alpha were used to evaluate the data collection document's validity and reliability, respectively. The study concludes that; protection has a statistically significant positive effect financial performance of Kenyan DT- SACCOs (p <0.01;β = 0.487), financial structure among Kenyan DT-SACCOs has a statistically positive effect on financial performance of Kenyan DT-SACCOs (p <0.01; β = 0.159), assets quality has a statistically significant positive effect on financial performance of Kenyan DT-SACCOs (p =.011; β = 0.076 ) and liquidity ratio has a positive effect on financial performance of Kenyan DT-SACCOs (p <0.01;β = 0.140). This research suggests that Kenyan DT-SACCOs should use the PEARLS rating model in order to identify components that need extra care. These DT-SACCOs should establish the best investment approach for managing protection for their assets while the asset portfolio value needs to be increased while keeping protection at the optimal minimum value and at a level that is already beyond the required threshold, DT-SACCOs should make sure that the supervisory function enhances effective financial structure and they should give special consideration to their liquidity management, loan monitoring, and loan recovery.