Capital Structure and Firm Efficiency of Deposit Taking Saccos in Kenya
DOI:
https://doi.org/10.53819/81018102t7007Keywords:
Saccos, efficiency, Capital Structure, SASRAAbstract
The stability and resilience of SACCOs' performance stood out both during and after the coronavirus epidemic. However, the average variable returns to scale regarding the ratio of members' deposits to loans issued by SACCOs is inefficient, with a ratio of less than one. This inefficiency impacts revenues and, in turn, the interest paid on members' deposits.. This study sort to investigate the effect of capital structure on the firm efficiency of deposit taking saccos in Kenya and was anchored on financial intermediation Theory, economic efficiency theory and capital structure theories. The study adopted a positivist paradigm and causal research design and target population of all 176 saccos as at 2021.A data review guide was used to extract secondary quantitative data from the saccos published financial reports from year 2015 to 2021. Stata version 13 was employed to run descriptive and inferential statistics after computing efficiency scores using data envelopment analysis model and results presented in graphs and tables. The study findings indicate that saccos efficiency has an increasing growth trend though not optimal with variable return to scale contributing the highest levels in efficiency relative to scale efficiency while capital structure does not significantly affect level of efficiency. The study recommends that the deposit-taking savings and credit management board strategize and implement a rebate payment policy, comply with regulations on external borrowing, and improve strategies for collecting deposits. Additionally, the study suggests further research to determine if specific elements of capital structure significantly influence the efficiency of deposit-taking savings and credit societies.
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