| dc.description.abstract | The study examined the effect of credit risk management practices on financial sustainability of village savings
and loan associations (VSLAs) in Matany Sub County in Napak district. The qualitative and quantitative or
mixed method research design was adopted for the study. Primary data collected from 68 respondents
randomly selected from a sample of 76 VSLA executive committee members has been analyzed using
descriptive, correlational and regression models. The findings are as follows:
VSLAs are dominated by men (68.8%) and youth under the age of 36 years (54.4%). The married participants
form a majority of participants in VSLA activities (75%), followed by widows and separated couples (19.1%).
There is laxity in loan appraisal; a weak though positive significant Pearson’s correlation r, between loan
appraisal and financial sustainability (r = 0.247, p≤ 0.05) and that there is statistically no significant effect of
loan appraisal on financial sustainability of VSLAs as shown by a regression coefficient (R2 = 0.047).
VSLA loan terms and conditions motivated borrowing and increased repayments. There was a strong positive
significant Pearson’s correlation coefficient r, between loan terms and conditions and financial sustainability (r
= 0.656, p≤ 0.01). There was additionally, a statistically significant variation in financial sustainability
contributed by loan terms and conditions as shown by a regression coefficient (R2 = 0.421).
VSLA loan recovery policies and procedures increased recovery and financing costs to VSLAs as shown by
descriptive statistics analysis findings. There is also a weak positive and significant Pearson’s correlation
coefficient r, between loan recovery policies and procedures and financial sustainability (r = 0. 427, p≤ 0.01)
and there was statistically no significant variation in financial sustainability contributed by loan recovery
policies and procedures as shown by the regression coefficient (R2 = 0.170).
The combined regression coefficients of loan appraisal; loan terms and conditions; and loan recovery policies
and procedures contribute 63.8% variance in financial sustainability of VSLAs in Matany Sub County.
Closer attention to gender participation disparities; refresher training and capacity building; institutional
capacity building and strengthening; VSLAs linkages with formal financial institutions; and further research
on risk management measures that contribute to 36.2% variation in financial sustainability of village savings
and loan associations in Matany Sub County in Napak district is recommended. | en_US |
