1 the Effect of Credit Policies on Financial Performance of Deposit Taking Saccos. Case Study: Saccos Moroto Municipality. Kitale Road Moroto.

Abstract

This research examined the effect of credit policy on financial performance of SACCOs in Moroto district and the study objectives were to examine the effect of credit standard on financial performance of, to find out if credit terms have effect on financial performance and to examine how collection efforts affects the financial performance of SACCOs, the researcher used the case study design and employed both qualitative and quantitative approaches in the study. The study considered a population of 80 staffs out of which 66 were sampled for the study using stratified sampling, random sampling and purposive sampling. Questionnaires and interviews were the instruments used to collect data, SPSS was used to analyse the data and correlation analysis was generated to establish the relationship between the variables.

The research findings revealed that the credit standards, credit terms policy and the collection effort policy were being used in deposit taking SACCOs to manage their loans/ debts, the correlation results show that use of the credit policies significantly increases return on assets of SACCOs increasing profitability.

The study concluded that there existed a significant strong and positive correlation between credit Standards and ROA which led to significant increase in financial performance, improve return on assets and that application of credit terms policy significantly increased ROA of SACCOs hence decreasing loan to assets ratio that led to increase in financial performance. For policy implications, the study recommends that SACCOs should continuously implement credit standards, credit terms and collection effort as it would result into significant increase in return on Assets to a greater Extent hence leading to its high financial performance.

Login to download()