Effect of Competition from Commercial Banks on the Financial Performance of San the Banking Sector in Kenya.

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.