International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue XII, December 2022|ISSN 2454-6186
Nelson Nkwasibwe, Atuhereze Elly Katsigaire
Ibanda University, Uganda
Abstract; The study examined the influence of credit assessment on financial performance SACCOs in Ibanda municipality. The main purpose was; to examine how credit risk assessment influences the financial performance of SACCOs in Ibanda municipality. The cross sectional descriptive survey design with quantitative approaches of data collection and analysis were used. The study population comprised of employees of SACCOs in Ibanda municipality. In this study credit supervisors and loans officers were the key respondents. A sample of 90 respondents was used. Questionnaires and documentary review were used to collect data. Statistical Package for Scientists (SPSS) Version (23) software helped in analyzing the collected data. Credit Risk assessment was found significant impacting on financial performance in the dimensions. The study thus recommended that there is a need for SACCOs to put in place credit assessment strategy.
Key Words: Credit Risk Assessment, Financial Performance, Sacco’s
I. INTRODUCTION
1.1 Study background
Savings and Credit Cooperative Societies (SACCOs) are voluntary associations or cooperative financial institution owned and controlled by their members and operated for the purposes of promoting savings, credit at low interest rates and providing other financial services to its members (Waweru, 2011). SACCOs are the important micro financing institutions for mobilization of financial resources for various development activities. Generally, the idea behind establishment of SACCOS is to promote savings and make credits available to the members (Mumanyi, 2014). More so, SACCOs are able to advance loans at interest rates lower than those charged by other financial providers. In addition, SACCOs have the ability and opportunity to reach clients in areas that are unattractive to banks, such as rural or poor areas. This has made SACCOs more attractive to customers, thus deeply entrenching themselves in the financial sectors of many countries (Musumbi, 2012). In fact, the core objective of SACCOs is to ensure members empowerment through mobilization of savings and disbursement of credit.
The savings and credit cooperative (SACCO) business embraced today arose in Bangladesh in 1976 with the formation of the Grameen Bank (Bouman, 1977). It became popular in the 1980s as a response to doubts and research in the state delivery of subsidized credit to poor farmers. According to Ledgerwood