The Effect of credit Risk Management on financial Sustainability of Savings and Credit Cooperative Societies (Saccos

Abstract

This research aims to evaluate the effect that credit risk management has on the financial viability of Savings and Credit Cooperative Societies (SACCOS) located in the Babati Town Council. The study examined the impact of credit evaluation techniques, debt collection procedures, and credit monitoring procedures on the financial viability of SACCOS. The study utilized case study design. Purposive sampling was employed to pick 51 Sacco’s members from the target population of all five registered SACCOS in the district. The sample size was determined by 23.7% of the target population (215). Semi structured questionnaires were utilized for 4 data collection and analysis was conducted using descriptive statistics and inferential statistics using SPSS. Validity was verified through the use of pilot study, and reliability was evaluated with the use of Cronbach's Alpha values in which the coefficient of 0.79 discovered. The study findings revealed that, revealing that both credit appraisal procedures have a statistically significant positive impact on financial sustainability. The high R-squared value underscores the explanatory power of these procedures in the financial performance of SACCOS, emphasizing that robust credit assessment processes are pivotal for improved financial sustainability. It is recommended that Savings and Credit Cooperative Societies (SACCOS) in the Babati Town Council focus on strengthening their credit risk management practices. This includes further enhancing and refining their credit appraisal procedures to ensure they align with best practices and institutional risk tolerance