DETERMINANTS OF DIVIDEND DECISIONS AND THE PERFORMANCE OF DEPOSIT TAKING SACCOS IN NORTH RIFT COUNTIES, KENYA

Deposit-taking Saccos in Kenya and the North Rift, in particular, have to adjust their way of doing business in order to maximize shareholder value and increase market share. The most common problem faced by Kenyan Saccos is the determination of dividends and the rationale for those dividends being paid out. The lack of a consensus on the Kenyan dividend policy is evident. Therefore, the main purpose of this study was to establish the determinants of dividends policy decisions on the performance of deposit-taking Saccos' in North Rift Counties, Kenya. Specifically, the study determined the effect of Sacco returns on performance of deposit-taking Saccos, to assess the effect of Sacco size on the performance of deposit-taking Saccos, to establish the effect of business risk on the performance of deposit-taking Saccos' and to evaluate the effect of growth opportunities of Saccos on the performance of Saccos in North Rift Counties in Kenya. The study was guided by Agency, Signaling effect theories, Bird in Hand Theory and Dividend Irrelevance Hypothesis theory. Therefore, the target population was all the nine Saccos that SASRA had registered in the North Rift Region by the end of July 2017. Thus, the respondents included all the management and board members of the deposit-taking Saccos in the North Rift Region. Primary data and secondary data were used, and the data was collected using closed-ended questionnaires. Data were analyzed using both descriptive and inferential statistics. The SPSS Version 24 was used to aid in the data analysis. The study established that Sacco returns a positive and significant effect on the performance of deposit-taking Saccos (β= 0.287; p< 0.05). Secondly, the study found out that Sacco size was positively and significantly affecting the performance of deposit-taking (β = 0.494; p < 0.05). In addition, the study found out that business risk was negatively and significantly affecting the performance of deposit-taking Saccos' (β = -0.125; p < 0.05). Lastly, the study established that growth opportunities of Saccos positively and significantly affect the performance of Saccos in North Rift Counties in Kenya ((β = 0.207; p < 0.05). The study's findings were of great significance to managers and policymakers to make policies that enhance the performance of the Saccos. The results also do provide input for future academic works conducted on the Sacco performance. With respect to practical value, the results of the study would reveal association between dividend policies and nearly all other organizational financial decisions. The study recommends the use of signalling Effect Theory with the view that dividend may have a signalling effect. The top management of a firm has more information about the strategy of the firm and can also forecast future earnings of the firm. Thus, people working in the firm have more information compared to other investors and the market in general.