Moral Hazard Related Determinants of Bad Debts in Deposit Taking Saccos in Nairobi County


  • Zipporah Wanjiru Muiruri The Cooperative University of Kenya
  • James Ndegwa, PhD The Cooperative University of Kenya
  • Moses Gweyi, PhD The Cooperative University of Kenya


The purpose of this study was to assess the moral hazard related determinants of bad debts in DT SACCOs in Nairobi County. The researcher used a descriptive cross-sectional research design in highlighting the determinants of the level of bad debts of SACCOs in Nairobi County. The study used census technique which involves studying the entire population. All the 43 deposit taking SACCOs licensed by SASRA were selected as sampling units. The data was analyzed using quantitative techniques guided by SPSS system of analysis. The presentation of analyzed data was in form of tables, graph and charts. The regression model was used in analyzing the moral hazard related determinants of bad debts in deposit taking SACCO’s in Kenya. The results revealed that moral hazard related determinants and level of bad debts have a positive and significant relationship. The study recommended that the SACCOs should discourage their borrowers from diverting their loans from its original use that they have agreed. This can be done by making follow up of the borrowers and how they are using the loans. This will minimize the number of bad debts in the deposit taking SACCOs. The SACCOs should also have favorable terms of giving loans to their customers so that the customers can be willing to repay back the loans. The Sacco employees should also ensure they have collected all the relevant information from the borrowers so as to avoid false from the borrowers. False information causes increase in bad debts in the long run.

Keywords: Moral Hazard, Bad debts, Deposit Taking SACCOS.

Author Biographies

Zipporah Wanjiru Muiruri, The Cooperative University of Kenya


James Ndegwa, PhD, The Cooperative University of Kenya


Moses Gweyi, PhD, The Cooperative University of Kenya



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How to Cite

Muiruri, Z. W., Ndegwa, J., & Gweyi, M. (2021). Moral Hazard Related Determinants of Bad Debts in Deposit Taking Saccos in Nairobi County. Journal of Finance and Accounting, 5(1), 1–15. Retrieved from