CREDIT RISK MANAGEMENT PROCESS AND QUALITY OF LOAN PORTFOLIO OF DEPOSIT TAKING SAVINGS AND CREDIT COOPERATIVE SOCIETIES IN NAIROBI METROPOLITAN

Dismas Okari Nyambati, Dr. Benjamin Otwoko

Abstract


The enormous contribution of financial institutions on economic growth and development cannot be overlooked. They are perceived to be blood arteries of economic development and poverty eradication. They are mandated to pump financial resources and bridging the gaps between deficit and surplus savings units. In fact, well-functioning financial system is aimed at accelerating economic growth. Same results are expected among DT SACCOs in Nairobi County. Thus, the study sought to examine the influence of credit risk management process on quality of loan portfolio of DT savings and credit cooperative societies in Nairobi County. Specifically, the study sought to determine the influence of credit risk analysis and credit risk monitoring on quality of loan portfolio of DT SACCOs in Nairobi County. The study was anchored on credit risk theory, agency theory, loan portfolio theory and information asymmetry theory. The study adopted descriptive research design and 54 respondents who included credit managers, of 54 DT Sacco’s in Nairobi Metropolitan. Primary data was gathered through administration of questionnaires. Descriptive and inferential statistics analyzed the data with aid of SPSS version 22. Data was presented in figures and tables. The study concludes that credit risk analysis has a positive and significant effect on quality of loan portfolio of DT-SACCOs in Nairobi Metropolitan. The study also concludes that credit risk monitoring has a positive and significant effect on quality of loan portfolio of DT-SACCOS in Nairobi Metropolitan. Based on the findings, the study recommends that the management of DT-SACCOS in Kenya should enhance credit risk administration practices. This involves establishing a dedicated credit risk management team responsible for continuously monitoring and reviewing loan performance and risk exposure. By implementing clear policies and procedures for loan approval, monitoring, and collection, DT-SACCOs can ensure that all credit risks are effectively managed throughout the loan lifecycle.

 

Key Words: Credit Risk Management Process, Credit Risk Analysis, Credit Risk Monitoring


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References


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