Capital Structure and Firm Efficiency of Deposit Taking Saccos in Kenya


  • Raphael Njenga Gichinga Kenyatta University
  • Dr. James Gatauwa Kenyatta University
  • Dr. Carolyne Kimutai Kenyatta University



Saccos, efficiency, Capital Structure, SASRA


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.

Author Biographies

Raphael Njenga Gichinga, Kenyatta University

Student, Kenyatta University, Kenya

Dr. James Gatauwa , Kenyatta University

Lecturer, Kenyatta University, Kenya

Dr. Carolyne Kimutai, Kenyatta University

Lecturer, Kenyatta University, Kenya


Biwott,M.,Macharia (2018).Financial regulation and firm’s technical efficiency: does size matter? a case of deposit taking SACCOs in Kenya, American Based Research Journal, Vol-7-Issue-10 Oct-2018 ISSN (2304-7151) :

Danjuma,I.; Umar,M.S.,; Hammmawa,D.D., 2015: Mediating effect of cash management in relationship between capital structure and liquidity in small and medium enterprises. International journal of economics and finance issue,2015,5(4), Adama University of technology,Yola,Adamawa State-Nigeria

Fosu, E.A. (2017). Technical efficiency and total factor productivity of rural banks in Ghana. Cogent Economics &Finance 5(1):1366088: DOI: 10.1080/23322039.2017.1366088

Fred, C. O.B., James,K., & Mungai,F.N.,(2017):Effect of SASRA regulations on financial performance of nyandarua county's deposit taking SACCOs in Kenya, international journal of economics, commerce and management, United kingdom

Ghazali.S. & Sabri.M. A . ( 2016). Efficiency of saving and credit cooperative units in north Aceh, Indonesia. DOI: 10.15408/sjie.v5i2.3193 Journal of Signifikan Volume 5 (2), Page 99 - 118 .Majid University of Malikussaleh, University of Syiah Kuala

Jeremiah, M.K. & Bichanga, O.,(2014). Financial Factors Influencing Performance of Savings and Credit Cooperative . Organization in Kenya. International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 291-302, DOI: 10.1111/j.1467-8292. 1996.tb01411.xS

Jerker,N.(2007). The nature of Cooperative values and principles. Journal Annals of public and cooperatrive values and Principle Vol 67 pages 633-653. DOI: 10.1111/j.146-8292.1996.tb01411.x

Kalundu,K..,Mirie,M.,Ochieng,D.E.&Lishenga,J.,(2019).Financial structure and operating efficiency of housing cooperative Societies.European Scientific Journal vol.15, no. 1857- 7431 DOI:10.19044/esj.2019.v15n28p109

Karan and Shanshank, S. T. & Shashank, P. (2013). Measuring bank performance of Nepali Banks: A data envelopment analysis (DEA) perspective, Econjournals, vol. 3(1), pages 54-65 Kenya,

Kimutai, C.J.,(2019).Asset size quality and efficiency of deposit taking savings and credit cooperative societies in Kenya. International Journal of Humanities and Social Science Vol. 9 No. 11 Doi:10.30845/ijhss.v9n11p10

Kipesha, E.F. (2013). Impact of Size and Age on Firm Performance: Evidences from Microfinance Institutions in Tanzania. Research Journal of Finance and Accounting4,10516.https;//

Kothari C. R. (2012). Research Methodology Methods and Techniques, New Age International

Mirie, M.,(2014). The influence of members’ income and conduct of SACCOs in the Relationship between characteristics and efficiency of SACCOs in Kenya.

Nyankomo.M & Aziakpono, M. (2016). Technical and scale efficiency of Tanzanian saving and credit cooperatives.The Journal of Developing Areas, 50(1),29-46.

Ochola, P.(2016). A two stage study of efficiency of savings and credit cooperatives society in Kenya an application of data envelopment analysis and Tobit regression Modelling International Journal of Economics, Commerce and Management United Kingdom Vol. IV, Issue 4, April 2016 , of Emerging Research Management & Technology ISSN2278-9359 Vol5 –issue 6

Parker,D. & Kirkpatrick,C.(2012). Measuring Regulatory Performance. The economic impact of regulatory policy: a literature review of quantitative evidence, OECD, Expert paper No.3,August 2012

Piot-lepetit, I., Perrigot, R., & Cliquet, G.(2012).Impact of the industry on franchise chain efficiency: A meta –DEA and context dependent DEA approach. The Journal of the Operational Research Society,65(11),1692-1699.Retrieved April 20,2021, from http://www, publishers.Edition:2nd ed. Publishers. New Delhi New Age 1990

Rayees, F & Sandeep, V (2017). moderating variables in business research. The IUP Journal of Business Strategy, XIV, 4, 2017

Saravia, A.J., Carlos, S.G., and Almonacid , P.A., (2019).Determinant of systematic risks with perspective of life cycle of a firm. JFin Econ.2021:26:1037-1049

SASRA Supervisory report (2015).Government printers press. www.sasra.go.ke




How to Cite

Gichinga, R. N., Gatauwa, J., & Kimutai, C. (2024). Capital Structure and Firm Efficiency of Deposit Taking Saccos in Kenya. Journal of Finance and Accounting, 8(3), 122–131.