International Journal of Multidisciplinary Research and Growth Evaluation  |  ISSN (Online): 2582-7138  |  Double-Blind Peer Review  |  Open Access  |  CC BY 4.0

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     2026:7/3

International Journal of Multidisciplinary Research and Growth Evaluation

ISSN (Online): 2582-7138 | Open Access

Influence of Capital Structure Components on Financial Performance of Deposit Taking Savings and Credit Cooperative Organizations in Kisii County Kenya

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Volume: 6 | Issue: 3 | Pages: 481-492

Subject: Agriculture

Country: Kenya

License: CC BY 4.0

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Abstract

Many deposit-taking SACCOs in Kisii County face financial instability due to poor management of their capital structure components. Despite their critical role in providing financial services, many SACCOs have failed to meet the minimum institutional capital adequacy requirements, with over 60% of SACCOs nationwide falling short according to SASRA reports. Weak equity bases, poor debt management, and low member deposits continue to undermine financial performance, putting long-term sustainability at risk. This persistent problem highlights the urgent need to understand how capital structure elements influence SACCOs’ financial outcomes, particularly in deposit-taking institutions where financial risks are higher. The study assessed the Influence of Capital Structure Components on Financial Performance of DT-SACCOS in Kisii County. The following specific objectives; To examine the influence of Equity capital, debt capital members deposits and hybrid instruments on financial performance. The study used cross-sectional research design.  Cross-sectional research design is applicable to explain accurate and systematic explanations of a study. The study was conducted in Deposit Taking SACCOs operating in Kisii Town. The employees in accounts and finance related department were selected for this study. The target population of the entire 256 employees  was used. This included employees from accounts department from cashiers, directors and accountants. The sample size of 156 plus 30% of  223 respondents through stratified sampling technique formula. The findings demonstrated that the components of capital structure; equity capital, debt capital significantly influence the financial performance. The findings highlight that equity capital plays a crucial role in enhancing the profitability, liquidity, and overall financial stability with a higher equity base tend to perform better financially, emphasizing the importance of strengthening this component for long-term sustainability. Debt capital, while a critical source of funding for growth and operational activities, must be carefully managed to avoid the risks associated with excessive borrowing Members' deposits were found to be the most stable and significant source of funding, directly impacting liquidity and profitability. Diversifying capital sources do not have as significant an impact on financial performance when compared to equity, debt capital. SACCOs should focus on strengthening their equity capital base. This can be achieved by encouraging members to increase their share capital investments and retaining more earnings. SACCOs should adopt effective debt management strategies that balance the need for debt with the risks of over-leveraging. Future research on the influence of capital structure components on the financial performance of SACCOs could explore several areas to deepen understanding and provide more insights.

 

How to Cite This Article

Andrew Ondimu, Dr. Julius Miroga (2025). Influence of Capital Structure Components on Financial Performance of Deposit Taking Savings and Credit Cooperative Organizations in Kisii County Kenya . International Journal of Multidisciplinary Research and Growth Evaluation (IJMRGE), 6(3), 481-492.

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Publication Information

Journal: International Journal of Multidisciplinary Research and Growth Evaluation (IJMRGE)

Publisher: Anfo Publication House

ISSN: 2582-7138 (Online)

Frequency: Bimonthly

Language: English

Open Access: Yes - This article is distributed under the terms of the Creative Commons Attribution 4.0 International License

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