Governance Structure and Loan Performance of Deposit Taking Saccos in Nakuru County, Kenya

Abstract

Abstract Purpose of the Study: The study examined the relationship between firm size, governance structure and loan performance among Deposit Taking SACCOs in Nakuru County, Kenya. Problem Statement: Deposit Taking SACCOs play a critical role in promoting financial inclusion, mobilizing savings, and extending affordable credit to support socio-economic growth in Kenya. However, persistent challenges related to governance weaknesses continue to undermine loan performance, leading to rising levels of non-performing loans and reduced financial stability Methodology: The study adopted a descriptive research design and used a census approach targeting 65 respondents comprising credit officers, internal audit and compliance officers, finance officers, operations managers, and chief executive officers from Deposit-Taking SACCOs in Nakuru County. Data were collected through structured questionnaires and analyzed using SPSS version 25, employing both descriptive statistics and inferential techniques such as correlation and regression to examine the relationship between governance structure and loan performance. Conclusion: The study concludes that effective governance characterized by strong board oversight, internal control mechanisms and sound risk management enhances loan recovery, reduces default rates and promotes financial sustainability. Recommendation: The study recommends that SACCOs should strengthen their governance frameworks and ensure strict compliance with regulatory standards to enhance credit discipline and institutional performance. Boards should promote transparency, accountability, and ethical leadership to sustain sound lending practices and improve overall financial stability.