Liquidity and Financial Performance in SACCOs: Evidence from Kiambu County, Kenya

The study examined the relationship between liquidity and financial performance in Savings and Credit Cooperative Organizations (SACCOs) in Kiambu County, Kenya, a crucial sector for financial inclusion and community welfare. With the rising need for effective financial practices, the research assessed how liquidity ratios—current, quick, and cash—impact SACCO performance, particularly their financial stability and operational efficiency. The study analyzed secondary financial data obtained from financial statements of 13 SACCOs registered under the SACCO Societies Regulatory Authority (SASRA) from 2019 to 2023, employing a census sampling technique to eliminate sampling errors. Using a descriptive and causal research design, data analysis was conducted through Stata 14.0, applying descriptive statistics to summarize liquidity ratios and inferential statistics to examine their effect on SACCO performance. Findings revealed a strong correlation between liquidity ratios and SACCO financial stability, where high liquidity improved trust and operational resilience. The study emphasized the necessity for SACCOs to implement sound liquidity management policies to meet short-term obligations while ensuring long-term growth. Key recommendations included adopting policies to maintain optimal cash and quick ratios, strengthening liquidity governance, and conducting regular liquidity assessments to manage financial fluctuations. The research also suggested expanding future studies to other counties such as Nairobi, Murang’a, Nakuru, and Kisumu while incorporating additional financial solvency determinants like capital adequacy. These insights provide valuable guidance for SACCO managers, policymakers, and stakeholders in enhancing financial resilience within Kenya’s cooperative sector.