Influence of Asset Management Strategies on Financial Performance of SACCOS in Imenti North Sub-County, Kenya

Abstract

The consistency of offering asset management products by Saccos enables them to easily settle their obligations when they fall due. Nevertheless, Kenyan Sacco’s have been experiencing low liquidity ratios concerns. The general objective of the study was to examine the influence of asset management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. The specific objectives were to determine the influence of cash flow management strategy, mortgage loan management strategy, treasury bills management strategy and stock control management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. The study used pecking order theory, contingency theory and resource based-view theory. Descriptive research design was adopted to collect data from 7 deposit taking Saccos located in Imenti North Sub- County. Further, the selection of representatives from the entire population was done using simple random sampling method to have 13 accounts department officers, 34 tellers, 28 back-office staff and 36 loans officers hence a total of 111 respondents. Quantitative data inform of closed-ended questionnaires and financial statements was collected and measured using SPSS version 24. The study conducted a pilot study in Unison Sacco located in Isiolo county. Descriptive statistics such as frequency, percentage and mean were analyzed while at the same time inferential statistics line Pearson Coefficients and multiple regression were similarly analyzed. The study found out that there was a positive influence of asset management strategies on financial performance of Saccos in Imenti North Sub-County, Kenya. This was because the p-value was 0.000 hence less than 0.05. Notably, the overall r was 0.779 and r-square was 0.607 with a Durbin Watson value of 1.392. Therefore, asset management strategies had a 60.7% influence on financial performance with a positive correlation. The conclusion made regarding cash flow was that the investment department was still undeveloped in many Saccos therefore limiting on the authorization of incorporation of funds in investment options like capital markets. On mortgage loan, there were high cases of default and inconsistent payment of interest, which was brought about by poor communication and follow-up skills applied by the staff when reminding the clients to pay their dues. On treasury bills, the Saccos had not adequately created awareness to their clients on the opportunities that they could generate from investing in treasury bills. On stock control, the Saccos had not invested resources towards acquiring latest stock management software that would offer real time data on the current inventory. Therefore, the study recommends that on cash flows, the BOM should create policies and provide adequate funds to establish an investment department, if there is none, or strengthen it if in existence. On mortgage loans, the management should introduce communication in-job training whereby the staff equipped with basic etiquette, and negotiation skills. On treasury bills, the marketing managers should ensure that they have developed treasury bills campaigns such as having a sensitization week in the branch. where clients get access to information regarding the T-bills. On stock control, the senior management should allocate funds to purchase various stock management software that would be used within the branches to manage their stock levels.