Factors determining member retention among Deposit-Taking SACCOs and Non-Deposit-Taking SACCOs in Kenya
Date
2024
Authors
Bugasu, L. Z.
Journal Title
Journal ISSN
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Publisher
Strathmore University
Abstract
This study presents a comprehensive examination of member retention in Kenya's Savings and Credit Cooperatives (SACCOs), focusing on two distinct types: Deposit-Taking SACCOs (DTS) and Non-Deposit-Taking SACCOs (NDTS). The sustainability and profitability of SACCOs depend heavily on member retention since it guarantees a steady membership base, which is essential to their long-term viability. High member turnover can undermine SACCOs and harm their financial stability because these organizations rely on member contributions for operating support and the supply of financial services. This study is among the first to compare and empirically document the member retention challenges faced by these two types of SACCOs since DTS was regulated in 2010. NDTS was only recently included in the regulatory framework by the Sacco Society Regulatory Authority (SASRA) in 2021. The research objectives were to assess retention levels, establish SACCO organizational factors for member retention strategies in DTS and NDTS, and evaluate management viewpoints on member retention in both DTS and NDTS. The study's theoretical approach was based on common bond, institutional, stakeholder, and agency theories. Using a mixed-methods methodology and positivist and post-positivist ideologies; the study combined quantitative and qualitative data. Cross-sectional data covering 2022 was analyzed using Ordinary Least Squares on data from 176 DTS and 185 NDTS in Kenya. SACCO officials’ questionnaires were used to enhance the data that came from SACCO annual reports. The results showed that while NDTS and DTS exhibited comparable member retention rates, DTS had somewhat higher average rates. The study determined that several factors affected member retention. Profitability was found to have a statistically significant, positive effect, whereas interest rates while hurting retention, were not. Retention rates were surprisingly negatively impacted by asset growth, although asset quality, while negatively correlated, was considered insignificant. The study also demonstrated the importance of corporate governance elements, indicating that while board diversity had no significant effect on member retention, board size had a positive effect. It was found that the most critical component for member retention was the composition of the board. Regulatory impact adversely impacted retention, and capital structure was not significant and hurt member retention. This study advances knowledge of SACCO dynamics in Kenya's financial industry and offers valuable information on member retention tactics and regulatory implications for SACCO management and legislators.
Description
Full - text thesis
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Citation
Bugasu, L. Z. (2024). Factors determining member retention among Deposit-Taking SACCOs and Non-Deposit-Taking SACCOs in Kenya [Strathmore University]. http://hdl.handle.net/11071/15491