Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya

Everlyn Ninga Munene; James Muchiri Ndambiri; Stephen Muthii Wanjohi

doi:doi:10.11648/j.ijafrm.20190401.11

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Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya

Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi

Published in International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 1)

Received: 26 October 2018 Accepted: 24 January 2019 Published: 28 February 2019

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Abstract

Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.

Published in	International Journal of Accounting, Finance and Risk Management (Volume 4, Issue 1)
DOI	10.11648/j.ijafrm.20190401.11
Page(s)	1-14
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Portfolio, Unsecured Loan, Co-Operative’s

References

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Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi. (2019). Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. International Journal of Accounting, Finance and Risk Management, 4(1), 1-14. https://doi.org/10.11648/j.ijafrm.20190401.11

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Everlyn Ninga Munene; James Muchiri Ndambiri; Stephen Muthii Wanjohi. Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. Int. J. Account. Finance Risk Manag. 2019, 4(1), 1-14. doi: 10.11648/j.ijafrm.20190401.11

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AMA Style

Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi. Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. Int J Account Finance Risk Manag. 2019;4(1):1-14. doi: 10.11648/j.ijafrm.20190401.11

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@article{10.11648/j.ijafrm.20190401.11,
  author = {Everlyn Ninga Munene and James Muchiri Ndambiri and Stephen Muthii Wanjohi},
  title = {Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {1},
  pages = {1-14},
  doi = {10.11648/j.ijafrm.20190401.11},
  url = {https://doi.org/10.11648/j.ijafrm.20190401.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190401.11},
  abstract = {Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.},
 year = {2019}
}

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TY  - JOUR
T1  - Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya
AU  - Everlyn Ninga Munene
AU  - James Muchiri Ndambiri
AU  - Stephen Muthii Wanjohi
Y1  - 2019/02/28
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190401.11
DO  - 10.11648/j.ijafrm.20190401.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 1
EP  - 14
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190401.11
AB  - Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.
VL  - 4
IS  - 1
ER  -

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Author Information

Everlyn Ninga Munene

Muchiri Ndambiri and Company Consulting Group, Nairobi, Kenya
James Muchiri Ndambiri

Muchiri Ndambiri and Company Consulting Group, Nairobi, Kenya
Stephen Muthii Wanjohi

Department Statistics and Actuarial Science, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

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Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi. (2019). Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. International Journal of Accounting, Finance and Risk Management, 4(1), 1-14. https://doi.org/10.11648/j.ijafrm.20190401.11

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ACS Style

Everlyn Ninga Munene; James Muchiri Ndambiri; Stephen Muthii Wanjohi. Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. Int. J. Account. Finance Risk Manag. 2019, 4(1), 1-14. doi: 10.11648/j.ijafrm.20190401.11

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AMA Style

Everlyn Ninga Munene, James Muchiri Ndambiri, Stephen Muthii Wanjohi. Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya. Int J Account Finance Risk Manag. 2019;4(1):1-14. doi: 10.11648/j.ijafrm.20190401.11

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@article{10.11648/j.ijafrm.20190401.11,
  author = {Everlyn Ninga Munene and James Muchiri Ndambiri and Stephen Muthii Wanjohi},
  title = {Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya},
  journal = {International Journal of Accounting, Finance and Risk Management},
  volume = {4},
  number = {1},
  pages = {1-14},
  doi = {10.11648/j.ijafrm.20190401.11},
  url = {https://doi.org/10.11648/j.ijafrm.20190401.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijafrm.20190401.11},
  abstract = {Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.},
 year = {2019}
}

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TY  - JOUR
T1  - Effect of Unsecured Commercial Bank Loans on Financial Performance of Savings and Credit Co-Operative Societies in Kenya
AU  - Everlyn Ninga Munene
AU  - James Muchiri Ndambiri
AU  - Stephen Muthii Wanjohi
Y1  - 2019/02/28
PY  - 2019
N1  - https://doi.org/10.11648/j.ijafrm.20190401.11
DO  - 10.11648/j.ijafrm.20190401.11
T2  - International Journal of Accounting, Finance and Risk Management
JF  - International Journal of Accounting, Finance and Risk Management
JO  - International Journal of Accounting, Finance and Risk Management
SP  - 1
EP  - 14
PB  - Science Publishing Group
SN  - 2578-9376
UR  - https://doi.org/10.11648/j.ijafrm.20190401.11
AB  - Changes that occur in the co-operative sector affect the development of the country and the general welfare of the members. Given the increasing aggressiveness by commercial banks in Kenya to offer unsecured loans to both their clients and non-clients and their marketing techniques that ensures wide coverage, then there is likelihood of the unsecured commercial bank loans affecting the financial performance of Savings and Credit Co-operative Societies in Kenya. Thus the general objective of this study was to establish the effect of unsecured commercial bank loans on financial performance of Savings and Credit Co-operative Societies in Kenya. The specific objectives of the study were to establish the effect of unsecured commercial banks loan amount, loan interest rate and loan tenure on financial performance of Savings and Credit Co-operative Societies in Kenya. The research adopted a causal research design. The population of the study was the 177 licensed deposit taking Savings and Credit Co-operative Societies and 43 licensed commercial banks in Kenya as at 2015. Secondary data was obtained from Savings and Credit Co-operative Societies Regulatory Authority Annual Supervision Reports and Central Bank of Kenya Bank Supervision Reports using data collection checklist. The study established that unsecured commercial banks loan amount and loan interest rates had a positive significant effect on financial performance of Savings and Credit Co-operative Societies with P-values of 0.004 and 0.03 and coefficients of 0.006468 and 0.013 respectively. Unsecured commercial banks loan tenure had a negative significant effect on financial performance of Savings and Credit Co-operative Societies with a P-value of 0.018 and a coefficient of -0.74. The findings of this study would be of benefit to the management and policy makers of Savings and Credit Co-operative Societies in formulating policies that would ensure they remain competitive amidst competition from commercial banks.
VL  - 4
IS  - 1
ER  -

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