Title: Credit Risk Management and Financial Performance of Deposit-Taking Savings and Credit Cooperatives in Kenya
Authors: Charles Katua Kithandi
Kalundu Kimanzi
Joshua Matanda Wepukhulu
Josphat Mboya Kiweu
Volume: 10
Issue: 6
Pages: 11-16
Publication Date: 2026/06/28
Abstract:
Across the world, savings and credit cooperative societies play a vital role in promoting financial inclusion and financial deepening. Therefore, the financial performance of these institutions is critical. The specific objective of this study was to examine the effect of credit risk management on the financial performance of deposit-taking savings and credit cooperative societies in Kenya. The study was anchored on Stakeholder Theory and adopted a descriptive research design. A census approach was employed, with the study population comprising all 176 deposit-taking savings and credit cooperative societies in Kenya. The study utilized secondary panel data covering the period 2014-2023. Data were collected from published financial statements using a structured data collection sheet. The findings revealed that credit risk management has a significant and positive effect on the financial performance of deposit-taking savings and credit cooperative societies in Kenya. Effective management of credit risk through prudent asset allocation and the maintenance of high-quality assets is therefore essential for improving financial performance within the savings and credit cooperative societies sector. The study recommends that the Sacco Societies Regulatory Authority should strengthen the enforcement of credit risk mitigation strategies among deposit-taking savings and credit cooperative societies. The study further recommends that deposit-taking savings and credit cooperative societies should prioritize and strengthen their credit risk management frameworks to enhance financial stability and improve overall financial performance.