The Relationship Between Financial Management Practices and Financial Performance of Savings & Credit Co-operatives Societies in Nairobi County Kenya

Abstract

The study was set to establish the relationship between financial management practices and financial performance of savings and credit cooperative society (SACCOS) in Nairobi County, Kenya. The study adopted survey design and primary data was collected using questionnaires. The data was analyzed using frequencies, percentage means, and regression and correlation analysis. The study found out that most Saccos have financial management policies that they use in their day to day operations. These policies were related to how profitable these Saccos were depending on how the management has applied them. It was noted that Saccos have emphasized on profitability and most of them have put the best policies that have led to growth in the stakeholder’s wealth. Cash management and investing in profitable venture like real estates and marketable securities have become common in the Saccos in their endeavor to create wealth. The study used regression analysis to find the relationship between financial planning, control,working capital management, segregation of duties in finance function, Sacco management philosophy on operating styles and Sacco profitability. Forecasting model was developed of this significant (R2 = 78.9% >70%). All the independent variables were also individually linearly related with the dependent variable thus a model of four predictor variables was used to rate the profitability of saccos in Nairobi county in Kenya. The study found out that the key policies on optimal cash utilization and investments played a major role in good fin recommended that further research should look at the relationship between Sacco financial management practices and the Sacco movement growth in Kenya.