Impact of Capital Adequacy on Financial Performance of Savings and Credit Cooperatives Societies in Meru County

Abstract

The goal of this report is to establish how capital adequacy influences the monetary performance of Meru County's licensed deposit-taking credit and savings cooperative institutions. The Pecking Order Theory was used in the study. The researcher used an expressive research design. The study focused on thirteen accredited deposit-taking SACCOS in Meru County. A catalogue of all certified deposit-compelling saccos in Meru County was used in the analysis. The survey method was used since the sample size was restricted. To achieve the aims of the research, quantitative information was scrutinized using the SPSS, which comprised both expressive and inferential statistics (SPSS version 25). To make conclusions, the study findings were analyzed, summarized, and presented using various eloquent statistical procedures. The study found out that there was a positive and significant relationship between capital adequacy and financial performance of Meru County's licensed deposit-taking credit and savings cooperative institutions. The study recommended that the executive must ensure that sufficient credit management controls are in place to guarantee that there is always optimal cash where there are strategies in place during low cash and surplus cash since either side will add to the organization's liquidity risk. Secondly, there is a need to critically examine in depth the cash management issues in both the external and internal environments that might impact cash management in institutions and to identify mitigating measures. Lastly, liquidity risk management should involve the management team’s projected cash and collateral needs, as well as the use of secondary sources of liquidity.