Credit Risk Management Practices and Asset Quality of Deposit Taking Savings and Credit Co-operative Societies in Kenya

Despite the key role DT-SACCOs play towards the growth of Kenyan economy, there is reported increasing occurrence of unsustainable levels of NPLs among these financial institutions. The increasing occurrence of NPLs are significantly obstructing asset quality; highly threatening their survival. This study closed this gap by assessing; risk identification, risk measurement, risk monitoring, and risk governance.as determinants of Kenya DT-SACCOs. The study used descriptive research design with the credit managers of Kenya's 176 licensed DT-SACCOs as the target population. The study employed census because the sample size was modest, easily accessible, and controllable. The data for the study was gathered from primary sources utilizing questionnaire. To create descriptive statistics for the study, the data was analyzed using quantitative analysis. Inferential statistics was then used to obtain a model. The study found that, at 5% significance level, risk identification has positive significant effect on asset quality of DT-SACCOS in Kenya in Kenya (p=0.015; β= 0.337; r= 0.394). risk measurement has a statistically significant and positive effect on asset quality of DT-SACCOS in Kenya (p=0.023; β=0.212; r= 0.358), risk monitoring has positive significant effect on asset quality of DT-SACCOS in Kenya (p= 0.049; β= 0.182; r= 0467) and risk governance positively and significantly affects asset quality of DT-SACCOS in Kenya (p= 0.034; β= 0.236; r= 0.470). The study recommends that the DT-SACCOS in Kenya should; enhance their risk identification policies by ensuring that their procedure authenticity of business proposal and business plan are effective to bale to identify credit risks and net worth of the borrowers, enhance their risk measurement procedure to ensure that there is thorough analysis and appraisal of the borrower before approving loan. enhance their risk monitoring polices and procedures to ensure approval authorities are well specified and empowered, and ensure their risk governance guidelines correctly address credit procedures and policies on review and recommendations and clearly spell out the requirements concerning checks on collateral of the borrower during credit review.