Effect of Regulatory Controls on Interest Rates of Deposit Taking Savings and Credit Co-operative Societies in Nairobi County

Abstract

This study was undertaken to assess the effects of regulatory controls on interest rates of deposit taking Savings and Credit Co-operative Societies (SACCOs) in Nairobi County. Its objective was to establish the impact of SACCO Societies Regulatory Authority (SASRA) regulations on interest rates levels charged by SACCOs in Nairobi County. A descriptive research design was used to collect data on a population of 34 Saccos that operate Front Office Services Activity (FOSAs) licensed by SASRA. Primary data was collected by use of questionnaire instrument while annual financial reports and Sasra reports provided the secondary data. This data was processed by Statistical Package for Social Scineces (SPSS) and analysed using analysis of variance (ANOVA) technique. The research findings reveal that the regulatory controls inception led to a slight increase in interest rates on Sacco loans /credit. This was as a result of increased compliance costs. The study observes that implementation of regulations in phases shall cushion Saccos on operational costs and profitability variations. The Sasra regulations are not punitive as such but likey to give positive impact on Sacco subsector performance in the long run.