| dc.description.abstract | SACCOS play a crucial role in providing financial services to the marginalized poor,
although they face several challenges. One significant challenge is the high rate of loan
default. In Nakuru County, SACCOS experiences a higher default rate compared to
microfinance and commercial banks. Therefore, this study aimed to evaluate how the
qualities of guarantors affect the recovery of non-performing loans among SACCOS in
Nakuru County. Specifically, the study aimed to analyze the impact of guarantor deposit,
the type of guarantor, the duration of guarantor membership, and the number of
guarantors on loan recovery. The study was guided by theories of information
asymmetry, adverse selection, and moral hazard. The study utilized a descriptive design,
focusing on 22 SACCOs within Nakuru County. The unit of analysis was 22 SACCOs in
Nakuru County while the unit of observation was 56 credit and recovery officers. Given
the manageable size of the target population, the researcher opted for a census approach,
including all 56 employees in the study. The study collected data using questionnaires.
The study conducted a pilot study in Kericho where 6 questionnaires were issued.
Cronbach's alpha coefficient was employed to assess research dependability. Both
descriptive and inferential statistics were utilized to analyze quantitative data. Based on
the findings, the study concluded that there is a positive and significant correlation
between guarantor deposits and the recovery of non-performing loans among SACCOS
in Nakuru County (r=0.603, p=0.000). Additionally, the study found a positive
correlation between the type of guarantor and the recovery of non-performing loans
among SACCOS in Nakuru County (r=0.753, p=0.000). Furthermore, the study
concluded that there is a positive and statistically significant correlation between
duration of guarantor membership and the recovery of non-performing loans among
SACCOS in Nakuru County (r=0.690, p=0.012). Finally the study concluded that there is
a statistically significant correlation between the number of guarantors and the recovery
of non-performing loans among SACCOS in Nakuru County (r=0.729, p=0.014). The
study recommended that SACCOS should adjust the required deposit amounts to better
align with the borrower’s loan size. The study also recommended that new policies be
formulated to classify guarantors more distinctly. SACCOS could benefit from
establishing clear criteria for differentiating between Class A and Class B guarantors. It
was recommended that this classification ensure higher-risk loans were matched with
guarantors better equipped to guarantee repayment. Additionally, practical interventions
were recommended to increase loan recovery. These included promoting long-term
guarantor memberships and requiring multiple guarantors for higher-risk loans. | en_US |
