Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya

James Muchiri Ndambiri; Everlyn Ninga Munene; Stephen Muthii Wanjohi

doi:doi:10.11648/j.ijfbr.20170305.11

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Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya

James Muchiri Ndambiri, Everlyn Ninga Munene, Stephen Muthii Wanjohi

Published in International Journal of Finance and Banking Research (Volume 3, Issue 5)

Received: 18 April 2017 Accepted: 16 June 2017 Published: 10 November 2017

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Abstract

The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.

Published in	International Journal of Finance and Banking Research (Volume 3, Issue 5)
DOI	10.11648/j.ijfbr.20170305.11
Page(s)	58-69
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2017. Published by Science Publishing Group

Keywords

Loan Portfolio, Loan Tenure, Sacco, Credit Worthiness

References

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APA Style

James Muchiri Ndambiri, Everlyn Ninga Munene, Stephen Muthii Wanjohi. (2017). Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. International Journal of Finance and Banking Research, 3(5), 58-69. https://doi.org/10.11648/j.ijfbr.20170305.11

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James Muchiri Ndambiri; Everlyn Ninga Munene; Stephen Muthii Wanjohi. Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. Int. J. Finance Bank. Res. 2017, 3(5), 58-69. doi: 10.11648/j.ijfbr.20170305.11

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AMA Style

James Muchiri Ndambiri, Everlyn Ninga Munene, Stephen Muthii Wanjohi. Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. Int J Finance Bank Res. 2017;3(5):58-69. doi: 10.11648/j.ijfbr.20170305.11

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@article{10.11648/j.ijfbr.20170305.11,
  author = {James Muchiri Ndambiri and Everlyn Ninga Munene and Stephen Muthii Wanjohi},
  title = {Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya},
  journal = {International Journal of Finance and Banking Research},
  volume = {3},
  number = {5},
  pages = {58-69},
  doi = {10.11648/j.ijfbr.20170305.11},
  url = {https://doi.org/10.11648/j.ijfbr.20170305.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20170305.11},
  abstract = {The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.},
 year = {2017}
}

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TY  - JOUR
T1  - Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya
AU  - James Muchiri Ndambiri
AU  - Everlyn Ninga Munene
AU  - Stephen Muthii Wanjohi
Y1  - 2017/11/10
PY  - 2017
N1  - https://doi.org/10.11648/j.ijfbr.20170305.11
DO  - 10.11648/j.ijfbr.20170305.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 58
EP  - 69
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20170305.11
AB  - The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.
VL  - 3
IS  - 5
ER  -

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Author Information

James Muchiri Ndambiri

Muchiri Ndambiri and Company Consulting Group (MNC), Nairobi, Kenya
Everlyn Ninga Munene

Muchiri Ndambiri and Company Consulting Group (MNC), Nairobi, Kenya
Stephen Muthii Wanjohi

Department Statistics and Actuarial Science, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

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James Muchiri Ndambiri, Everlyn Ninga Munene, Stephen Muthii Wanjohi. (2017). Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. International Journal of Finance and Banking Research, 3(5), 58-69. https://doi.org/10.11648/j.ijfbr.20170305.11

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ACS Style

James Muchiri Ndambiri; Everlyn Ninga Munene; Stephen Muthii Wanjohi. Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. Int. J. Finance Bank. Res. 2017, 3(5), 58-69. doi: 10.11648/j.ijfbr.20170305.11

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AMA Style

James Muchiri Ndambiri, Everlyn Ninga Munene, Stephen Muthii Wanjohi. Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya. Int J Finance Bank Res. 2017;3(5):58-69. doi: 10.11648/j.ijfbr.20170305.11

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@article{10.11648/j.ijfbr.20170305.11,
  author = {James Muchiri Ndambiri and Everlyn Ninga Munene and Stephen Muthii Wanjohi},
  title = {Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya},
  journal = {International Journal of Finance and Banking Research},
  volume = {3},
  number = {5},
  pages = {58-69},
  doi = {10.11648/j.ijfbr.20170305.11},
  url = {https://doi.org/10.11648/j.ijfbr.20170305.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20170305.11},
  abstract = {The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.},
 year = {2017}
}

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TY  - JOUR
T1  - Effect of Loan Portfolio Characteristics on the Level of Non-performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County Kenya
AU  - James Muchiri Ndambiri
AU  - Everlyn Ninga Munene
AU  - Stephen Muthii Wanjohi
Y1  - 2017/11/10
PY  - 2017
N1  - https://doi.org/10.11648/j.ijfbr.20170305.11
DO  - 10.11648/j.ijfbr.20170305.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 58
EP  - 69
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20170305.11
AB  - The main source of income for Savings and Credit Co-operative Societies in Kenya is from interest received from issue of loans to its members. However the issuance of loans has been faced with a lot of challenges as a result of default on repayment of principal loan and interest when they fall due. In the event that this trend is not checked it could lead to collapse of Savings and Credit Co-operative Societies movement and hence have a negative impact on the financial sector. The main objective of the study was to determine the effect of loan portfolio characteristics on the level of Non-Performing Loans for Savings and Credit Co-operative Societies in Kirinyaga County. The study was conducted on Deposit Taking Savings and Credit Co-operative Societies in Kirinyaga County, Kenya. The researcher used both descriptive and causal research design. The Deposit Taking Savings and Credit Co-operative Societies registered by Savings and Credit Co-operative Societies Regulatory Authority for the period 2011-2014 in Kirinyaga County were six and hence a census was conducted. The researcher used secondary data which was obtained from published Savings and Credit Co-operative Societies Annual Financial Statements and Reports and from Savings and Credit Co-operative Societies Supervision Annual Reports for the period 2011-2014 with data collection checklist being used as the instrument for data collection of the models. The findings of the study would be helpful to current and potential investors, regulatory bodies and would add important information to the existing body of literature. The study recommended that Savings and Credit Co-operative Societies should diversify their loan portfolio by advancing loan of different products, consider adjusting loans repayment period appropriately, should not concentrate much on making decisions on interest rates adjustment, ensure that the ratio of Loan to Shareholder equity is high so that they can have a strong asset base thus win public confidence and should consider advancing loans of different amounts since borrowers vary in their credit worthiness.
VL  - 3
IS  - 5
ER  -

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