Lending decision, Sacco size and liquidity of farmers based deposit-taking Saccos in Kenya.

Abstract

Kenyan farmers' Deposit-taking Savings and Credit Cooperatives (DT-SACCOs) have seen a drop in credit provision, from 9.6% in 2022 to 5.2% in 2023. Additionally, 52% of these SACCOs have been declared illiquid due to imprudent lending practices. This has led to the closure or license revocation of 33% of farmers-based DT-SACCOs. To address this issue, the study aimed to assess the moderating effect of SACCO size on the relationship between lending decisions and liquidity of farmers-based DT-SACCOs. The study employed an explanatory research design and utilized selfadministered questionnaires. The study findings indicate that SACCO size significantly moderates the relationship between lending decisions and liquidity of farmers-based DT-SACCOs. As a recommendation, SACCOs should consider their size when making lending decisions, allowing larger SACCOs to manage more risk in loans to farmers, while smaller SACCOs may need to exercise more caution.