Financial Innovations and Operational Performance of SACCOs in Kisii County, Kenya

Naom Mwagi () and Dr. Julius Miroga ()

International Journal of Finance, 2025, vol. 10, issue 4, 64 - 80

Abstract: Purpose: Financial innovation plays a critical role in shaping organizational performance. Financial institutions have employed various strategies to enhance their competitiveness and profitability. In Kenya, Savings and Credit Cooperative Societies (SACCOS) are vital economic actors, offering timely services such as flexible loans to individuals who prefer micro-institutions over traditional banks. This study explored the impact of financial innovation on the operational performance of SACCOS in Kisii County. It examined the effects of institutional, product, service, and process innovations on their operations. Methodology: A census approach was used to cover all 69 registered SACCOS in the county. Primary data were gathered through self-administered questionnaires, validated via a pilot test. Both descriptive (means, standard deviations) and inferential (correlation and regression) statistics were employed in the analysis. Findings: The results showed that institutional, product, and process innovations each had a significant positive effect on operational performance. Overall, the findings confirm that financial innovation significantly enhances the operational efficiency and stability of SACCOS in Kisii County. Unique Contribution to Theory, Policy and Practice: This study contributes to theory by expanding the understanding of financial innovations as drivers of operational performance in SACCOs. It offers policy implications for regulating and fostering financial innovation within SACCOs to enhance efficiency and competitiveness. Practically, the study provides SACCO managers with insights into adopting innovative financial practices to improve service delivery, streamline operations, and align with evolving market demands, ensuring sustainable growth and operational excellence.

Keywords: Institutional Innovations; Product Innovations; Service Innovations; Process Innovations; Performance; SACCOs (search for similar items in EconPapers)
Date: 2025
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