| Peer-Reviewed

Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya

Received: 15 September 2020     Accepted: 22 October 2020     Published: 30 October 2020
Views:       Downloads:
Abstract

This study explored the influence of sacco lending rates on dividend payout among saccos in Kenya. The study was motivated by inconsistency in the ability of Saccos to live up to their promise of paying dividends to members. There are variabilities in dividend payout based on different sacco sectors. Saccos pay dividends on a different percentage from the previous year. Different saccos have varying rates of interest charged on loans lend to members. The present study targeted all registered DTSSaccos in Kenya (n=179) over an eight-year period (2012-2019). The study used panel data. Descriptive results showed that Sacco Lending interest rates which reflect the capacity of saccos to generate income, which they could distribute as dividends were on a downward trend, between 2012 and 2019 and large scale saccos had highest rates. Indeed, small saccos use dividends as a business strategy to retain and attract new members, thereby augment their capital. The findings from this study are useful to the board of directors and management team of companies in deciding an appropriate lending rate for the company. The results are also useful to shareholders in making investment decisions. The study extends empirical evidence on dividend policy determinants which are currently reported to be inconclusive. In addition, the study fills the lacuna in the existing literature by focusing on the issue of dividend policy determinants in the context of an emerging sector, namely saccos.

Published in International Journal of Finance and Banking Research (Volume 6, Issue 5)
DOI 10.11648/j.ijfbr.20200605.12
Page(s) 96-101
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), 2020. Published by Science Publishing Group

Keywords

Dividend Payout, Sacco Size, Lending Rates, Loans, Investment Decisions

References
[1] Sasra. (2014). The Sacco Societies Regulatory Authority Sacco Supervision Annual Report.
[2] Korir J. (2018). Effects of Dividend Policy on Financial Performance of Commercial Banks Listed at the Securities Exchange.
[3] Ndung'u, & George M. (2010). Factors influencing Digital Divide In The Rural- And Semi- Urban Regions of Kenya: Case study of Juja Town and the Surrounding Areas.
[4] Ahmad. (2017). Determinants of dividend payout policy. An empirical study of banking sector of Pakistan.
[5] SASRA, (2016). Sasra. (2013). SACCO Supervision Annual Report 2013, (Deposit Taking SACCOs),” SACCO Societies Regulatory Authority (SASRA), 2013.
[6] SASRA (2019). The Sacco Supervision Annual Report. Nairobi.
[7] Muthusi. (2014). University of Nairobi Institutional Repository.
[8] Musiega G, Alala B, Musiega D, Makomba C, & EgessaR. (2013). Determinants of Dividend Payout Policy among non Financial Firms on The Nairobi Securities Exchange. International Journal of Scientific & Technological Research, 2 (10).
[9] Eisenhardt. (1989). Agency theory: An assessment and Review Enow, ST and Issaca EBH. (2018). Factors that determine dividend payout: Evidence from the Financial sectors in South Africa. Journal of Banking and Finance Management, 1 (1), 48-53.
[10] Al-Malkawi H. (2007). Determinants of corporate dividend policy in Jordan. An Application of the Tobit Model. A journal of economics and adminstrative sciences, 44-70.
[11] Jensen M, & MecklingW. (1976). Theory of Firm: managerial behaviour, agency cost and ownership structure. Journal of Financial Economics, 3 (4).
[12] Grinbalt M, & Titman S. (1996). The Impact of Performance Based Fees on Pension Management. University of California.
[13] Shabibi, & Ramesh. (2011). An Empirical Study on the Determinants of Dividend Policy in the UK. Journal of Finance and Economics Issue 80.
[14] Easterbrook F. H. (1984). Two Agency Costs Explanations of Dividends. Economic Review, 74, 650-659.
[15] Omokhudu O, & Toluwa O. (2018). Agency cost and dividend policy in Nigerian Non-Financial Quoted Firms. International Journal of Academic Research In Business and Social Sciences, 8 (4), 325-350.
[16] Mwangi P, Mutiso A, & Kabata D. (2018). Influence of Cshflow Liquidity on Dividend Payout Among Deposit Taking and Credit Cooperatives Societies (SACCos) in Kenya. International Journal of Finance and Accounting, 9 (20), 81-86.
[17] Appiah. (2011). The determinants of operational risk in US financial institutions.
[18] Edet B, Atairet E, & Anoka F. (2014). Determinants of dividend payout of financial Institutions in Nigeria: A study of selected commercial banks. Research Journal of Finance and Accounting, 5 (7), 74-79.
[19] Sekaran, & Bougie. (2010). Research methods for business: A skill-building approach 5th ed.
[20] Greener. (2010). Improving health and well-being independently of GDP: Dividends of greener and prosocial economies.
[21] Blaikie N. (2010). Designing Social Research. Cambridge: Polity Press.
[22] Kothari C. (2004). Research Methodology: Methods and Techniques. New Delhi: New Age International Publishers.
[23] Were, & Wambua. (2014). What factors drive interest rate spread of commercial banks? Empirical evidence from Kenya.
[24] Shibutse R, Kalunda E, & Achoki G. (2019). Effect of Liquidity and Dividend Payout on Financial Performance of Deposit Taking Saccos in Kenya. Integrated Journal of Business and Economics, 297-312.
Cite This Article
  • APA Style

    Solomon Munyoki Kathuo, Oluoch Oluoch, Agnes Njeru. (2020). Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya. International Journal of Finance and Banking Research, 6(5), 96-101. https://doi.org/10.11648/j.ijfbr.20200605.12

    Copy | Download

    ACS Style

    Solomon Munyoki Kathuo; Oluoch Oluoch; Agnes Njeru. Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya. Int. J. Finance Bank. Res. 2020, 6(5), 96-101. doi: 10.11648/j.ijfbr.20200605.12

    Copy | Download

    AMA Style

    Solomon Munyoki Kathuo, Oluoch Oluoch, Agnes Njeru. Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya. Int J Finance Bank Res. 2020;6(5):96-101. doi: 10.11648/j.ijfbr.20200605.12

    Copy | Download

  • @article{10.11648/j.ijfbr.20200605.12,
      author = {Solomon Munyoki Kathuo and Oluoch Oluoch and Agnes Njeru},
      title = {Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya},
      journal = {International Journal of Finance and Banking Research},
      volume = {6},
      number = {5},
      pages = {96-101},
      doi = {10.11648/j.ijfbr.20200605.12},
      url = {https://doi.org/10.11648/j.ijfbr.20200605.12},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20200605.12},
      abstract = {This study explored the influence of sacco lending rates on dividend payout among saccos in Kenya. The study was motivated by inconsistency in the ability of Saccos to live up to their promise of paying dividends to members. There are variabilities in dividend payout based on different sacco sectors. Saccos pay dividends on a different percentage from the previous year. Different saccos have varying rates of interest charged on loans lend to members. The present study targeted all registered DTSSaccos in Kenya (n=179) over an eight-year period (2012-2019). The study used panel data. Descriptive results showed that Sacco Lending interest rates which reflect the capacity of saccos to generate income, which they could distribute as dividends were on a downward trend, between 2012 and 2019 and large scale saccos had highest rates. Indeed, small saccos use dividends as a business strategy to retain and attract new members, thereby augment their capital. The findings from this study are useful to the board of directors and management team of companies in deciding an appropriate lending rate for the company. The results are also useful to shareholders in making investment decisions. The study extends empirical evidence on dividend policy determinants which are currently reported to be inconclusive. In addition, the study fills the lacuna in the existing literature by focusing on the issue of dividend policy determinants in the context of an emerging sector, namely saccos.},
     year = {2020}
    }
    

    Copy | Download

  • TY  - JOUR
    T1  - Influence of Sacco Lending Rates on Dividend Payout Among DT Saccos in Kenya
    AU  - Solomon Munyoki Kathuo
    AU  - Oluoch Oluoch
    AU  - Agnes Njeru
    Y1  - 2020/10/30
    PY  - 2020
    N1  - https://doi.org/10.11648/j.ijfbr.20200605.12
    DO  - 10.11648/j.ijfbr.20200605.12
    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  - 96
    EP  - 101
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20200605.12
    AB  - This study explored the influence of sacco lending rates on dividend payout among saccos in Kenya. The study was motivated by inconsistency in the ability of Saccos to live up to their promise of paying dividends to members. There are variabilities in dividend payout based on different sacco sectors. Saccos pay dividends on a different percentage from the previous year. Different saccos have varying rates of interest charged on loans lend to members. The present study targeted all registered DTSSaccos in Kenya (n=179) over an eight-year period (2012-2019). The study used panel data. Descriptive results showed that Sacco Lending interest rates which reflect the capacity of saccos to generate income, which they could distribute as dividends were on a downward trend, between 2012 and 2019 and large scale saccos had highest rates. Indeed, small saccos use dividends as a business strategy to retain and attract new members, thereby augment their capital. The findings from this study are useful to the board of directors and management team of companies in deciding an appropriate lending rate for the company. The results are also useful to shareholders in making investment decisions. The study extends empirical evidence on dividend policy determinants which are currently reported to be inconclusive. In addition, the study fills the lacuna in the existing literature by focusing on the issue of dividend policy determinants in the context of an emerging sector, namely saccos.
    VL  - 6
    IS  - 5
    ER  - 

    Copy | Download

Author Information
  • Department of Economics and Finance, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

  • Department of Economics and Finance, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

  • Department of Economics and Finance, Jomo Kenyatta University of Agriculture and Technology, Nairobi, Kenya

  • Sections