Influence of Cashflow Liquidity on Dividend Payout Among Deposit Taking Saving and Credit Cooperative Societies (SACCOs) in Kenya

Abstract

In the recent past Saving and Credit Cooperatives Societies in Kenya have gained popularity as a result of high interest being charged by commercial banks and borrowers have shifted their focus to the SACCOs due to their fixed interest rates on loans. SACCOs pay high dividends in comparison to commercial banks, however the level of dividend payout keeps on fluctuating and thus shareholders are not aware of what they expect in the next financial year. Studies have been carried out to examine the determinants of dividend of payout, where various factors have been identified and inconsistency results have been found in regard to the influence of cashflow liquidity on dividend payout. Therefore, the main purpose of this study was to establish the influence of cashflow liquidity on dividend payout among deposit taking saving and credit cooperative societies (SACCOs) in Kenya. The study focused on deposit taking SACCOs as more researchers have focused on commercial banks and SACCOs in general. The study used descriptive and correlational research design. The target population was the 176 the deposit taking SACCOs in Kenya, out of which a sample of 108 respondents were randomly selected each SACCO that was included in the sample. Questionnaire and document analysis were used to collect data and which was analyzed with the help of SPSS (23). The study findings revealed that there was a significant positive relationship between cashflow liquidity and dividend payout. It was concluded that cashflow liquidity influenced dividend payout, among deposit taking SACCOs in Kenya. It was recommended to improve cashflow liquidity SACCOs should adopt conservative approach for management of working capital elements. The study also recommended that to improve cashflow liquidity, SACCOs should reduce the proportion of their long-term loans to short term loans. The study recommended further analysis on the influence of cash reserve ratio on dividend payout.