Abstract:
SACCO societies have more complex financial structures given their
localization of capitalization and liquidity albeit mutual guarantee capital
structure. This study sought to analyze the effect of equity capital financing
s
tructure levels on financial performance of SACCOs. The study targeted
27
SACCOs in Kikuyu Sub County,
Kenya. The study adopted a
cross
sectional
survey
research design to capture
the opinions of SACCO societies’ owners
and/or managers at a specific time.
Using stratified purposive sampling technique,
5 SACCOs and 10 key respondents were selected for the study. The study obtained
primary data from the key respondents and secondary data from SACCO accounting
records for the years 2013 to 2016. D
ata collected
was presented and analyzed
qualitatively and quantitatively using content analysis,
and
regression and
analysis of variance (ANOVA) respectively. Based on the results, equity
financing varied significantly in the specified period. The SACCOs’ financial
pe
rformance increased whenever there was a decrease in equity and increase
in debt capital levels up to optimal level. The study further revealed that
majority of the SACCOs did not employ debt financing in the previous years’
compared to the current period.
They significantly relied on members’
deposits and retained earnings as prime sources of capital financing. The
study recommend
s
that Sub County co
-
operative officers should train the
central management committee members and executive managers on capital
financing strategies with the aim of enhancing effective and reliable financial
performance of their SACCO societies.
