Effects of Capital Structure on the Financial Performance of Savings and Credit Cooperative Societies in Kenya

Abstract

The aim of this study was to analyze the influence of capital structure on how SACCOs' perform financially. The study targeted the 239 SACCOs in Mombasa that do not accept deposits from members. These were used as a representation of all such SACCOs in Kenya.  A survey design that is both descriptive and exploratory was used in this study. Primary data was compiled through the use of questionnaire and collection forms aided the gathering of secondary data. Non –parametric, parametric tests were done to examine the influence and the direction of the association among capital structure and SACCOs' financial performance. The results of the correlation for the both primary and the secondary data showed that capital structure influenced financial performance in a way that was positive and significant. This implies that capital structure is important and SACCOs ought to handle their capital mix carefully. Results from the hypothesis testing indicated that there was need to reject the null hypothesis. The researcher suggested that SACCOs should employ capital mix that would help to improve how SACCOs performed financially. The researcher recommended the carrying out of a similar research in other sectors. A similar one could be done on SACCOs but this time use both structured and unstructured questionnaire with the aim of extracting more information.