Effects of Selected Macroeconomic Variables on Deposit Level of Savings and Credit Cooperatives in Nairobi County, Kenya

Abstract

SACCOs have a significant, vital part to play in the overall economy. By analyzing how savings in SACCOs are impacted by macroeconomic factors such as economic growth, interest rates and inflation, we can gain insights into the financial behavior of individuals and communities. This information can help policy makers and economists understand the impact of macroeconomic policies on savings behavior and financial stability at a broader level. It also provides valuable data for assessing the effectiveness of economic policies and formulating better policies to control the influence of macroeconomic variables. The research aimed to investigate how macroeconomic factors influence the SACCOs’ deposit level in Nairobi. The researcher conducted both descriptive and correlational analyses on the deposit taking SACCOs in Nairobi for the period 2014-2023. Data analysis was done by use of Stata software version 15 and research findings were presented in tables. Secondary data on deposit level was collected from Sacco Societies Regulatory Authority supervision annual reports on SACCOs. Data on macroeconomic variables was retrieved from KNBS. Total deposits were used to measure deposit level while GDP, average deposit rate and CPI measured economic growth, interest rates and inflation respectively. The findings indicated that a weak relationship (R=0.299) existed between deposit level of SACCOs in Nairobi and macroeconomic variables. The determination coefficient reported was 0.0898. It suggested that the macroeconomic factors explains 8.98% of the total variations in deposit level of SACCOs in Nairobi. The ANOVA statistics showed a significance level of 0.0% revealing that the model was deemed ideal. Additionally, it was confirmed that economic growth and interest rate on deposit had a significant direct effect on the level of deposit of SACCOs in Nairobi. It was determined that inflation affected the level of deposit of SACCOs in Nairobi negatively significantly.