Influence Of Financial Innovations On Financial Performance Of Savings and Credit Co-Operative Societies In Nyeri County

Abstract

Financial innovations are crucial to sustaining financial performance. The study sought to establish the influence of financial innovations on financial performance of SACCO’s in Nyeri County. This study was guided by Rogers’s Innovation Diffusion Theory, Technology Adoption Models and Task- Technology Fit Theory as the theoretical frameworks. The population of the study was the fifty six(56) active SACCO’s operating in Nyeri County as at December 31, 2013.This study employed a cross sectional survey research design and stratified sampling technique was used to determine the sample of 30 SACCO's. A semi structured questionnaire was used as the data collection tool and was self-administered to the target sample of respondents. To establish the validity and reliability of the data collection instrument, a pilot study was carried out. Cronbach alpha coefficient was used to assess the reliability of the data collection tool. Factor analysis was used to measure the construct validity of the questionnaire. Descriptive statistics were generated to describe the study objectives and the profile of respondents. Measures of variations were used to establish convergence of the responses. Inferential statistics, including, model fitness (R ), ANOVA and regression coefficients were used to test the study null hypothesis. Data was presented using tables and bar charts. Majority of the participants (62%) indicated that telephone banking had affected SACCOs financial performance to a great extent. A significant number of participants (83%) indicated that internet banking had affected financial performance of SACCOs to a great extent. A significant number of participants (78%) in the study indicated the electronic funds transfer affected financial performance to a great extent. The study findings show that telephone banking (p=0.000) and internet banking (p=0.032) were statistically significant at 95%.The study concludes that there is a significant relationship between financial innovations and the financial performance of SACCOs and that telephone banking 2 and internet banking were found to be the main drivers of the financial performance of SACCOs. The study recommends that more investment should go into mobile and internet banking since the two drive profitability as opposed to ATM banking.