Thesis:

Assessing effects of Sacra financial reporting tools on financial performance of DT-Sacco’s in Kenya

Despite being crucial to Kenya's socioeconomic development, DT-SACCOs' financial performance is significantly impacted by issues related to financial reporting and monitoring that are getting worse. As a result, licenses have been revoked and five DT-SACCOs have collapsed. Still, SASRA has recommended financial tools for monitoring and reporting to help DT-SACCOS address these kinds of risk management issues that are negatively impacting financial performance. Research on SASRA financial reporting tools is vital for improving the performance, transparency, and sustainability of DT-SACCOs in Kenya. Although, there is a affluence of investigations on financial performance aspects including; earnings, liquidity, asset quality, and capital adequacy, the findings of extant empirical studies are inconsistent occasioned by methodological, conceptual, and contextual gaps. The current study as a consequence closed these knowledge gaps by evaluating the impact of financial tools for financial reporting and monitoring provided by SASRA on the financial performance of DT-SACCOs in Kenya. The specific objective to guide the study was to find out the effect of capital adequacy, asset quality, earnings, and liquidity on the financial performance of deposit-taking savings and credit cooperative societies in Kenya. The foundational theories underpinning this framework encompassed Capital Asset Pricing Model, Capital Buffer Theory, Liquidity Preference Theory, and Expense-Preference Behavior Theory. The study embraced a positivist paradigm, utilized a correlational research design**, and employed a rigorous quantitative methodology, ensuring a robust and objective analysis of the research phenomena. The target population for this research comprised the 181 DT-SACCOs actively involved in the SACCO business in Kenya between 2018 and 2022. Given the manageable size and accessibility of the population, a census approach was adopted, inviting every member of the target group to participate as a respondent. A meticulously designed data collection sheet was employed to gather information from secondary sources. To ensure the robustness of the findings, content analysis was utilized to assess the validity, while Cronbach's Alpha was applied to evaluate the reliability of the data collection instrument. Quantitative evaluation of the data is required to produce descriptive and inferential statistics. The data were meticulously scrutinized for normality, heteroscedasticity, multicollinearity, linearity, and autocorrelation. The study findings show that; capital adequacy has a statistically significant positive impact on the financial performance of Kenyan DT-SACCOs, accounting for 11.67% of the variation in financial performance., asset quality, conversely, exerts a statistically significant negative influence on financial performance, with a negative impact accounting for 22.88% of the variance in financial outcomes, earning ability, similarly, demonstrates a significant negative effect on financial performance of Kenyan DT-SACCO, and liquidity has a positive significant effect on Kenyan DT-SACCOs' financial performance, accounting for 29.68%. The study concludes that SASRA financial reporting tools; capital adequacy, asset quality, earning ability, and liquidity are vital for addressing pressing concerns related to financial performance of DT-SACCOs and for enhancing it. The study recommendations suggest that DT-SACCOs in Kenya should, implement robust internal mechanisms to continuously monitor their capital adequacy, enhance asset quality and maintain financial stability through comprehensive credit evaluation mechanisms, conduct a comprehensive review of operational costs, continuously monitor liquidity levels and adjust related policies.