Influence of Interest Rates Charged on Financial Performance of Savings and Credit Cooperative Societies: A Case of Nyamira County, Kenya

Abstract

The study sought to determine the influence of interest rates on financial performance of savings and credit cooperative societies (SACCOs). Savings and Credit Cooperative Societies (SACCOs) play an essential role in economic development as part of the financial system. Descriptive research design was used. The target population of this study was all the six deposit taking SACCOs in Nyamira County consisting of 234 employees, from whom a sample of 75 employees was selected. Data collected was primary data. Reliability of the research instrument was calculated using Cronbach's coefficient alpha of 0.7472. Data was collected using questionnaires and analyzed using both descriptive statistics and inferential statistics with the aid of Statistical Package for Social Sciences (SPSS). The study identified issues that affect financial performance of the SACCO. The research challenges the management of Gusii Mwalimu SACCO to consider the interest rates they charge on loan to members as compared to other financial institutions because if featured as the major challenge to financial performance of Gusii Mwalimu SACCO. Interest rates should be reviewed frequently depending on the prevailing market rates.