DIVERSIFICATION STRATEGY AND GROWTH OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN NAIROBI COUNTY, KENYA

Abstract

Savings and Credit Cooperative Societies (SACCOs) are vital component of Kenya’s banking industry, contributing to economic growth, financial inclusion, and poverty reduction. However, their growth has been hampered by lack of diversification. This study examined association between diversification strategy and growth of deposit taking SACCO’s. The research adopts the dynamic capabilities theory. The target population comprised 144 departmental heads in credit, finance and marketing from 48 licensed deposit-taking as the Target Population SACCOs in Nairobi. The study selected up to 105 members of staff in a purposive sampling technique. Primary was gathered using closed questionnaires. Descriptive and regression analysis were used for analysis. The results revealed diversification strategy has a positive association with SACCO growth. It recommends that SACCO leadership adopt structured diversification strategy to enhance growth. The results for the study variables were; credit accessibility New technology (beta= 0.47, p-value=0.000), Non-loan income activities (beta= 0.39, p-value=0.000), Products variety (beta= 0.51, p-value=0.000) and Investment in subsidiaries (beta=0.35, p-value = 0.000). Based on the obtained results diversification strategy significantly affect growth. The main recommendation was that managers and financial institutions should promote improve diversification strategy to facilitate SACCOs in Nairobi county.