FINANCIAL RESTRUCTURING AND PERFORMANCE OF DEPOSIT TAKING SACCOs IN KIAMBU COUNTY, KENYA
FINANCIAL RESTRUCTURING AND PERFORMANCE OF DEPOSIT TAKING SACCOs IN KIAMBU COUNTY, KENYA
Siraj Jelle Hillow - School of Business, Economics and Tourism, Department of Accounting and Finance, Kenyatta University, Kenya
James M. Gatauwa (PhD) - School of Business, Economics and Tourism, Department of Accounting and Finance, Kenyatta University, Kenya
ABSTRACT
Savings and Credit Cooperative Organizations (SACCOs) are critical microfinance institutions that serve as essential pillars of financial inclusion, particularly in developing economies. This study examined the effect of financial restructuring on the financial performance of Deposit-Taking SACCOs (DT-SACCOs) in Kiambu County, Kenya, for the period 2021–2024. The study was anchored on three theoretical frameworks: the Resource-Based View (RBV), the Loanable Funds Theory, and the Financial Intermediation Theory. A causal research design was employed, targeting all 14 licensed DT-SACCOs in Kiambu County. A census approach yielded a sample of 42 management staff comprising branch managers, finance managers, and operations managers. Primary data were collected through structured questionnaires, and a pilot study was conducted in Murang'a County to assess instrument validity and reliability. Secondary data were drawn from audited financial statements and SASRA regulatory reports. Data were analyzed using descriptive statistics and multiple linear regression analysis via SPSS Version 27. Results revealed that deposit restructuring exerted the strongest positive effect on financial performance (β = 0.326, Beta = 0.337, p = 0.001), followed by debt restructuring (β = 0.287, Beta = 0.301, p = 0.003), and equity restructuring (β = 0.268, Beta = 0.284, p = 0.004). The overall regression model was highly significant [F(3, 36) = 28.346, p < 0.001], with an R² of 0.707, indicating that the three restructuring dimensions collectively explained 70.7% of the variance in financial performance. The study concludes that strategic and integrated financial restructuring substantially improves the performance of DT-SACCOs. It recommends that SACCO management adopt comprehensive restructuring frameworks that simultaneously address debt management, deposit mobilization, and equity optimization. Policymakers, particularly SASRA, should develop supportive regulatory guidelines that facilitate member-centered restructuring without compromising institutional stability. Future studies should extend this inquiry to other counties and incorporate governance quality, technology adoption, and competitive strategy as additional determinants of SACCO performance.
