Financial literacy and the growth of deposit-taking Saccos in Eastern region of Kenya.

Abstract

Deposit-taking Savings and Credit Cooperative Societies have increasingly adopted financial inclusion practices. However, many continue to exhibit poor growth, as evidenced by declining membership, assets, loan repayment rates, and operational efficiency. Recent data indicates significant drops in withdrawable deposits, net income, and overall financial performance, compounded by high default rates and non-remitted funds. These trends highlight persistent challenges in leveraging financial inclusion to drive growth. The primary goal of this study was to evaluate the impact of financial literacy on the growth of deposit-taking SACCOs in the Eastern Region of Kenya. The study was anchored on the financial inclusion theory and the theory of planned behavior. The study used an explanatory research design. The target population comprised 134 management respondents from all 26 deposit-taking SACCOs in the eastern region of Kenya comprising finance managers, operations managers, marketing managers, information technology and heads of other departments including audit, procurement, and research. Data was collected from a sample of 104 management respondents using a structured questionnaire. Data analysis was done using descriptive and inferential statistics using the Statistical Package for Social Sciences. The study concluded that financial literacy had a statistically significant effect on the growth of deposit-taking SACCOs (β=.266, P=0.009