Abstract:
In an effort to reduce agency problems the members of Deposit
Taking Savings and Credit Co-operatives elect board of directors to
offer governance in attaining their economic, social and cultural needs.
Nevertheless, governance costs have increased by 36 percent since
2014 to 2019 leading to reduction in surpluses which have rendered an
aggregate of 47.32 percent of the Deposit Taking Savings and Credit
Co-operatives financially unsound, thus putting 341-billion-member
savings at risk. This necessitated the assessment of the moderating
effect of SACCO size on governance costs and financial soundness. A
descriptive cross-sectional survey design was adopted where data
collection sheet was used in secondary data collection. A binary logistic
regression results established that with presence of a moderator in the
nexus between predictor and response variable, the strength of
relationship between variables registered a significant change (15.6
percent to 18.3 percent) as well as with introduction of interaction term
(15.6 percent to 19.3 percent). The study concluded that SACCO size
portrayed a statistically significant moderating effect between predictor
variable and response variable. The study recommends that small size Deposit Taking Savings and Credit Co-operatives should merge with
other Deposit Taking Savings and Credit Co-operatives who are of a
similar common bond or interest to form larger Deposit Taking Savings
and Credit Co-operatives in term of Size so as to achieve financial
soundness.
