Effect of leverage and firm size on financial performance of deposit taking savings and credit cooperatives in Kenya

Robert Shibutse, Elizabeth Kalunda and George Achoki
Additional contact information
Robert Shibutse: Chandaria School of Business, United States International University, P.O. Box 14634 -00800, Nairobi, Kenya
Elizabeth Kalunda: Chandaria School of Business, United States International University, P.O. Box 14634 -00800, Nairobi, Kenya
George Achoki: Chandaria School of Business, United States International University, P.O. Box 14634 -00800, Nairobi, Kenya

International Journal of Research in Business and Social Science (2147-4478), 2019, vol. 8, issue 5, 182-193

Abstract: Critical to the success of financial institutions' performance is there Capital Structure. The study aimed to, investigate the effect of two capital structure determinants, leverage, and firm size on financial performance as measured by Return on Assets of Deposit Taking Savings and Credit Cooperative Societies in Kenya. The study was grounded on Tradeoff, Pecking order, and Mogdiliani and Miller capital structure theories. A positivist approach was adopted utilizing a mixed-method research design. The population of the research study was 174 Deposit Taking Savings and Credit Cooperative Societies from whom primary and secondary data was collected. A stratified and purposive sampling technique was employed. Descriptive statistics and a regression model were used to analyze the data. The results revealed that firm size had a significant and positive effect on financial performance, whereas Leverage, had a significant but negative effect on financial performance. The study recommends having in place an Assets and Liabilities committee in each Deposit Taking Savings and Credit Cooperative Society that would help manage the assets and liabilities of the institution, ensuring sound liquidity and cash flow management. Critical factors that contribute to a firm size such as increased membership, deposits mobilization amongst others need to be addressed. Key Words:Capital Strucure, Financial Performance, Leverage, Firm Size

Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/462/435 (application/pdf)
https://www.ssbfnet.com/ojs/index.php/ijrbs/article/view/462 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rbs:ijbrss:v:8:y:2019:i:5:p:182-193

Access Statistics for this article

International Journal of Research in Business and Social Science (2147-4478) is currently edited by Prof.Dr.Umit Hacioglu

More articles in International Journal of Research in Business and Social Science (2147-4478) from Center for the Strategic Studies in Business and Finance Editorial Office,Baris Mah. Enver Adakan Cd. No: 5/8, Beylikduzu, Istanbul, Turkey. Contact information at EDIRC.
Bibliographic data for series maintained by Umit Hacioglu ().