Abstract:
Kenya has a long history of co-operative development characterized by strong
growth, thus making significant contribution to the economy. Co-operatives are
recognized by the government as a major contributor to national growth and
development as they are found in almost all sectors of the economy and account for
more than thirty percent of the National Domestic Saving. Commercial banks in
Kenya have staged a stiff competition to the Co-operatives through provision of
unsecured personal loans. The Co-operatives consequently devised competitive
strategies to counter competition through reducing loan processing period and
increasing loan repayment period. This has increased productivity, job creation and
improved national economic growth and development. This study sought to
establish whether competition from commercial banks affect financial performance of
Savings and Credit Co-operatives (SACCOs) in Kenya. The study adopted a
descriptive survey and quantitative research design. The target population was Co-
Book of Abstracts, 2018 37
operatives in the banking sector in Kenya. Stratified sampling and simple random
sampling were used. A Likert scale questionnaire was used to gather primary
information and a secondary data collection sheet was used in gathering information
regarding financial performance of the SACCOs. Information was sorted, coded and
input into the statistical package for social sciences (SPSS) version 21.0 for production
of graphs, tables, descriptive statistics and inferential statistics. There was a positive
relationship between competition from commercial banks and financial performance
of SACCOs in the banking sector in Kenya, correlation coefficient of 0.647 p-value of
0.000. The study concluded that competition from commercial banks is statistically
significant in explaining financial performance of SACCOs in the banking sector in
Kenya. We recommend that SACCOs should effectively manage competition from
banks to improve their financial performance and to further stir up national economic
growth to eradicate poverty.
