LIQUIDITY MANAGEMENT AND FINANCIAL PERFORMANCE OF DEPOSIT TAKING SACCOS IN NAIROBI COUNTY, KENYA
Keywords:
Liquidity Management, Financial Performance, DT-SACCOs, Nairobi County, Contingency Funding ManagementAbstract
Sustained growth in profitability and performance of deposit-taking Savings and Credit Cooperative Organizations (DT-SACCOs) ensures continued rewards for investors, which in turn encourages increased investment and spurs economic growth. Despite impressive liquidity measurements, many DT-SACCOs often struggle to meet short-term obligations to members, particularly in loan disbursement. This study examined the influence of liquidity management on the financial performance of DT-SACCOs in Nairobi County, focusing on contingency funding management and overall liquidity management. A descriptive research design was adopted, targeting SACCO managers through structured sampling, with data collected using questionnaires and secondary sources, and analyzed quantitatively using SPSS to generate descriptive statistics and regression results. Findings revealed that contingency funding management and liquidity management all have a positive and significant impact on the financial performance of DT-SACCOs. The study concluded that these factors are crucial in shaping SACCOs’ financial outcomes and recommended strengthening liquidity decision-making processes such as cash flow forecasting and ratio analysis, aligning dividend policies with market dynamics, enhancing compliance with regulatory frameworks like CAMEL and PEARLS, adopting stronger internal controls, and that SASRA should consider mandatory cash ratio requirements to be deposited with the regulator.
Key Words: Liquidity Management, Financial Performance, DT-SACCOs, Nairobi County, Contingency Funding Management
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