Abstract
The financial performance of Savings and Credit Cooperative Organizations (SACCOs) in Kenya has been a major concern in recent years, as they play a critical role in promoting financial inclusion and economic development in the country. SACCOs in Kenya have been criticized for making poor expansion decisions, leading to losses and declining financial performance. Several studies have explored the effects of expansion decisions on the financial performance of SACCOs. However, these studies have not been able to fully solve the financial performance problem facing SACCOs in Kenya due to various factors. The study on expansion decisions' effects on SACCOs' financial performance in Bungoma County was significant for promoting financial inclusion and overcoming challenges faced by SACCOs, including competition from digital financial services. The study aimed at examining the effect of expansion decisions on the financial performance of savings and credit cooperative organizations in Bungoma County, Kenya. Transaction cost theory served as the study's guide. To achieve its objectives, the study used a quantitative cross-sectional survey design. A total of 640 respondents were targeted, and 240 respondents were sampled, including the Chief Executive Officers (CEO), Chief Financial Officers (CFOs), accounting staff, and administrative staff. Stratified, proportionate and simple random sampling were used. To ensure the validity and reliability of the data collected, the researcher used various methods. Firstly, expert review, construct validity, and criterion validity were employed to ensure the validity of the questionnaires used. Secondly, the Cronbach alpha method was used to test the reliability of the questionnaires. A pilot study was conducted to identify any issues with the questionnaires before the actual study. After collecting data, it was cleaned and coded to ensure that it was ready for analysis. Descriptive statistics such as frequency and percentages were computed to summarize the expansion decisions and financial performance. The findings were that the expansion decision was fairly agreed upon at 83 (51.2%) in relation to financial performance. Expansion decisions were a significant predictor of financial performance (t =12.678, p