INTERNAL CONTROL SYSTEMS AND CREDIT RISK OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN  WESTERN KENYA

NYANGERI, JANET MONGINA

dc.contributor.author	NYANGERI, JANET MONGINA
dc.date.accessioned	2023-01-13T06:17:49Z
dc.date.available	2023-01-13T06:17:49Z
dc.date.issued	2022-12
dc.identifier.citation	Adams, M. B. (1994). Agency Theory and the Internal Audit. Managerial Auditing Journal. Adegboyegun, A. E., Caleb, E. B., Ademola, A. O., Oladutire, E. O., & Sodeinde, G. M. (2020). Internal Control Systems and Operating Performance: Evidence from Small and Medium Enterprises (SMEs) in Ondo State. Asian Economic and Financial Review. Agang, J. O. (2020). Internal Controls and Credit Risk among Commercial Banks Listed in Nairobi Securities Exchange, Kenya. Akwaa-Sekyi, E. K. (2020). Internal Controls and Credit Risk in European Banking: Basel Committee on Banking Supervision Framework. Akwaa-Sekyi, E. K., & Gené, J. M. (2016). Effect of internal controls on credit risk among listed Spanish Banks. Omnia Science, 357-389. Alin, A. (2010). Multicollinearity. Wires Computational Statistics, 2(3). Al-Mahdi, M. A. (2022). The Effect of Applying the COSO Internal Control System on Improving the Professional Specialization of the Internal Auditor in Iraqi Commercial Banks. World Bulletin of Management and Law, 95-109. Amunabi, E. K., & Koori, J. (2018). Credit Risk Management and Loan Portfolio Performance among Deposit Taking Savings and Credit Cooperative Societies in Nairobi City, Kenya. Strategic Journal of Business & Change Management, 5(2), 2489 - 2502. Anderson , R. L. (2012). The Problem of Autocorrelation in Regression Analysis. Journal of the American Statistical Association, 113-129. Andove, M. K. (2019). Internal Control Practices and Financial Performance of Faith Based Facilities in Kakamega County. Biesta, G. (2010). Pragmatism and the Philosophical Foundations of Mixed Methods Research. Los Angeles: Sage. Bosire, A. M. (2017). An Assesment of the Effects of Credit Risk Manangement Procedures on Financial Performance of Micro- finance Institutions in Kisii County. Bower, & Paine. (2021, August 2). Bower and Paine’s Criticism of Agency Theory. Retrieved from StudyCorgi.: https://studycorgi.com/bower-and-paines criticism-of-agency-theory/ Buro, I. A. (2019). Credit Risk Management and Performance of Loan Portfolios of Deposit TakingSavings and Credit Cooperative Societies in Garissa County, Kenya. Chepngeno, T. (2017). The Effect of Internal Audit Function on the Financial Performance of Saccos: The Case of Nairobi County. Nairobi: Unpublished MBA Thesis. 90 Collis, J., & Hussey, R. (2013). Business Research: A Practical Guide for Undergraduate and Postgraduate Students. New York: Macmillan International Higher Education. COSO. (2013). Internal Controls Framework. Eisenhardt, K. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review. Fiedler, F. E., & Mahar, L. (1979). The Effectiveness of Contingency Model Training: A Review of the Validation of Leader Match. In F. E. Mahar, Personnel Psychology (pp. 45-62). Gasombe, J. U. (2014). Internal Audit and Credit Risk Management of Financial Institutions in Rwanda. Gerard, J. A., & Weber, C. M. (2004). How Agency Theory Informs a $30 Million Fraud. Journal of Finance, Accounting and Management, 16-47. Ghasemi, A., & Zahediasl, S. (2012). Normality Tests for Statistical Analysis: A Guide for Non-Statisticians. International Journal for Endocrinology and Metabolism, 486–489. Githui, E. (2019). Effect of Internal Control System on Credit Risk Management in Commercial Banks. Gogtay, N. J., & Thatte, U. M. (2017). Principles of Correlation Analysis. Journal of The Association of Physicians of India , 78-81. Hanoon, N. R. (2020). The Correlation between Internal Control Components and the Financial Performance of Iraqi Bank. Journal of Advanced Research in Dynamical & Control System. Jensen, M. C., & Meckling, W. H. (1976). Agency costs and the theory of the firm. Journal of Financial Economics, 305-360. Jokipii, A. (2009). Determinants and consequences of internal control in firms: a contingency theory based analysis. Journal of Management & Governance, 115–144. Junyong , I. (2017). Introduction of a pilot study. Korean Journal of Anaesthesiology, 601-605. Kangogo , M. K. (2019). Effect of Internal Control System on Financial Performance of Saccos in Kenya: A Case of Tharaka Nithi County. International Journal in Management and Social Science, 63-95. Katumba, A. (2021). Credit risk management practices of savings and credit cooperative societies: a case of Uganda Revenue Authority Sacco. Makerere University, Kampala, Uganda: Unpublished masters research report. Lukomnik, J., & Hawley, J. P. (2021). Moving Beyond Modern Portfolio Theory. London: Routledge. Maina, C. W. (2021). Influence of Internal Controls on Financial Performance of Medium Enterprises in Food Manufacturing Sector in Nairobi County. 91 Makori, G. O., & Sile, I. (2017). Effects of Credit Appraisal Practices and Credit Monitoring on Profitability of Deposit Taking Sacco’s In Nairobi County. Journal of Entrepreneurship and Project Management, 1(1), 46 - 60. Markowitz, H. (1952). Portfolio Theory. The Journal of Finance, 77-91. Mihret, D. G. (2014). How can we explain internal auditing? The inadequacy of agency theory and a labor process alternative. Critical Perspectives on Accounting, 771-782. Ministry of Industrialization and Enterprise Development. (2014). History and organization of cooperative development and marketing in the sub-sector of Kenya. Mogga, J. P., Mwambia, F., & Kithinji, M. M. (2018). Effect of Credit Risk Management on the Financial Performance of Commercial Banks in Juba City, South Sudan. International Academic Journal of Economics and Finance, 3(2), 93-116. Mogunde, M. B. (2016). The relationship between internal controls and the financial performance of cement manufacturing companies in Kenya. Nairobi: University of Nairobi. Mu’azu, S. B. (2017). The Relevance of Contingency Theory and Stewardship Theory on the Internal Audit Research . Journal of World Economic Research, 17-22. Mugenda, O. G., & Mugenda, M. A. (2013). Research methods : Quantitative and Qualitative approaches. Nairobi: Acts Press. Mulinge, E. K. (2019). Effect of Credit Risk Management Framework on Financial Performance of Deposit Taking Savings and Credit Cooperatives in Kenya. Mungai, D. K., Maina, M., & Kungu, J. N. (2021). Effect of Internal Control Systems on Financial Performance of Public Universities in Kenya . Research Journal of Finance and Accounting, 2222-2847. Muniru, S. (2018). Internal Control Systems and Financial Performance of Savings and Credit Cooperative Societies in Bushenyi- Ishaka Municipality: A Case of SACCOs in Ishaka Division. Kampala: Unpublished MBA Thesis. Mwichigi, G. N. (2019). Internal Controls and Credit Risk in Commercial Banks listed in Nairobi Securities Exchange Kenya. Njiru, D. (2016). The Effect of Internal Control Systems on Financial Performance of Public Water Companies in Kenya. Ntoiti, R., & Jagongo, A. (2021). Non-Performing Loans and Financial Stability of Deposit Taking Saccos Regulated by SASRA. International Journal of Finance and Accounting, 29-39. Nyumoo, A. K. (2020). Effects on the Internal Controls on Financial Performance of SACCOs in Meru County. 92 Oluoch, J., & Chepkirui, P. S. (2021). Effects of Internal Controls on the Finacial Performance of County Referral Hospitals in Kenya. Global Journal of Management and Business Research, 2249-4588. Omondi, M. A. (2021). Internal Control Systems on Financial Accountability in National Public Secondary Schools in Kenya. Otoo, I. C., Asuma, S., Amankona, G. P., & Andzie, A. T. (2021). Impact of Internal Control Systems on Performance of Universal Banks: Evidence from Ghana. Ouko, J. K., & Atheru, G. (2022). Internal Control System and Financial Performance of Deposit Taking Savings and Credit Co-Operative Societies in Makueni County, Kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 1-20. Pham, H. N. (2021). How Does Internal Control Affect Bank Credit Risk in Vietnam? A Bayesian Analysis. Journal of Asian Finance, Economics and Business, 8(1), 873–880. Rogers, R. H. (2016). Using lenses to make sense of research: A review of sharon M. ravitch and matthew riggan's reason & rigor: How conceptual frameworks guide research. The Qualitative Report, 1708-1712. Rosopa, P. J., Schaffer, M. M., & Schroeder, A. N. (2013). Managing heteroscedasticity in general linear models. American Psychological Association, 18(3), 335–351. SASRA. (2020). The SACCO Supervision Annual Report. Shungula, E. M., Shavulimo, P., & Kambura, S. (2017). Internal Determinants of Credit Risk Management of Deposit Taking Saccos in Nairobi County. International Journal of Business and Management Invention, 6(7), 43-53. Taherdoost, H. (2016). Validity and Reliability of the Research Instrument; How to Test the Validation of a Questionnaire/Survey in a Research. International Journal of Academic Research in Management, 28-36. Temile, S. O., Enakirerhi, L. I., Ighosewe , F. E., & Jatmiko, D. P. (2019). Risk Management and Internal Control System of Nigeria's Banking sector. Humanities & Social Sciences Reviews, 943-949. The Kenya Financial Stability Report. (2020). Financial Sector Regulators.	en_US
dc.identifier.uri	http://erepository.kafuco.ac.ke/123456789/155
dc.description.abstract	Internal control systems in SACCOs have been implemented as one of the key measures necessary for promoting a healthy business environment by mitigating risks that arise with credit creation. Despite implementing internal control systems, credit risk is still an issue in these SACCOs. This study’s key objective was to determine the effect of internal control systems on credit risk of deposit-taking SACCOs in Western Kenya. Specific objectives were; to assess the effect of control environment on credit risk of deposit-taking SACCOs in Western Kenya, to establish the effect of control activities on credit risk of deposit-taking SACCOs in Western Kenya, to evaluate the effect of risk assessment on credit risk of deposit taking SACCOs in Western Kenya and to examine the effect of monitoring on credit risk of deposit- taking SACCOs in Western Kenya. The study was guided by agency, contingency, and modern portfolio theories. The target population consisted of 212 respondents from the seven registered deposit-taking SACCOs. In this study, a descriptive research design was used. The sample size was obtained through simple random sampling. Both primary and secondary data were used. Primary data was collected using questionnaires, while secondary data was obtained from audited financial statements of the SACCOs using a secondary data collection sheet. Data were analyzed using Statistical Package for Social Sciences (SPSS). Statistics were generated using both descriptive and inferential methods. Descriptive data included; frequencies and percentages. Diagnostic tests comprised; normality, autocorrelation, multicollinearity, and heteroscedasticity. Inferential statistics contained correlation analysis, multiple regression analysis, and ANOVA. The diagnostic tests conducted conformed with the linear regression requirements. The independent variables of the study were negatively correlated, with Control Activities having a correlation coefficient of -0.517, Risk Assessment with -0.763 and Monitoring with -0.635. The regression model showed an R-squared of 0.612 while ANOVA had an F-statistic of 3.132 with a p-value of 0.007 which was greater than 0.005.The findings of the regression analysis revealed that control environment had a β of -0.089 with a p-value of 0.124, control activities had a coefficient of -0.191 with a p-value of 0.011, risk assessment had a β value of -0.225 and a p-value of 0.007 while monitoring had a β value of -0.217 and a p-value of 0.001. Control activities, Risk assessment, and Monitoring had a significant negative relationship with credit risk, but the control environment had an insignificant relationship with credit risk. It was recommended that SACCOs review their policies and procedures regularly to meet the current market trends. Internal and external audits should be reviewed to check on variances and appropriate measures to deal with them. Credit monitoring should be done to guarantee that loans are repaid on time and issued to credit-worthy individuals.	en_US
dc.description.sponsorship	KAIMOSI FRIENDS UNIVERSTY	en_US
dc.language.iso	en	en_US
dc.title	INTERNAL CONTROL SYSTEMS AND CREDIT RISK OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN WESTERN KENYA	en_US
dc.type	Thesis	en_US