Co-operatives are a major contributor to national growth and development and account for over thirty percent of the National Domestic Saving in Kenya. This study sought to establish the effects of investment policy on the financial performance of Savings and Credit Co-operatives (SACCOs) in the banking sector in Kenya. This study adopted a descriptive survey design. The target population was Co-operatives in the banking sector in Kenya. Stratified sampling and simple random sampling were used to obtain the sample items. A Likert scale questionnaire was used to gather primary information and a secondary data collection sheet was used in gathering secondary information on financial performance. Data was presented in the form of tables, graphs and descriptive statistics and was analyzed using inferential statistics. The study revealed that the investment policy of SACCOs in the banking sector ensured that surplus funds are used in giving loans to members and where returns were guaranteed such as in Government bonds. Any other investments must be approved by members during the annual general meeting. Members were also encouraged to plough-back their dividends. The results indicated that there was a positive relationship between invest policy and the financial performance of SACCOs in the banking sector in Kenya with a correlation coefficient (r) of 0.679, coefficient of determination (r2) of 0.461 and with a t-value of 0.000. The study concluded that investment policy is statistically significant in explaining the financial performance of SACCOs in the banking sector in Kenya. The study recommended that SACCOs should have a sound investment policy so as to boost their financial performance and for economic sustainability. Further, the managerial team and especially the board members and the supervisory committee should be trained on managerial skill so as to effectively oversee the implementation of the policies.
30 June 2023
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