Capital Adequacy and Financial Intermediation Efficiency of Deposit Taking Saccos’s in Kenya
Abstract
The regulation of Deposit Taking Saving and Credit Co-operative societies was expected to enhance transparency and accountability in the management of DT SACCO’s and thus protecting the interests of members. This was expected to lead to better service to members through provision of timely loans and advances with minimal risk exposures. SACCO’s have been identified as major financial player away from the Commercial Banks thus important in financial intermediation. This study sought to establish the influence of Capital Adequacy on intermediation efficiency of DT SACCO’s in Kenya. The study targeted 174 DT SACCO’s operating in Kenya as at 31st December 2019. Data analysis was done using both descriptive and inferential statistics. Descriptive statistics used in the study included measures of central tendency; mean; dispersion and standard deviation. Inferential statistics used included correlation and regression analysis. The study findings showed that there was an increase in financial intermediation efficiency within the period under study and thus can be concluded that as DT SACCOs complied with Capital Adequacy requirements their financial intermediation efficiency improved. It was also established that pure efficiency was lower than scale efficiency throughout the period under study, thus there is need for management to examine their performance inefficiencies so as to minimize wastages and spillage of performance opportunities.
Key words: Financial intermediation efficiency, Capital Adequacy, Deposit taking SACCO
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