National Payment System Innovations and Performance of Deposit Taking SACCOs in Kenya
DOI:
https://doi.org/10.47604/ijfa.4023Keywords:
National Payment System Innovations, Deposit Taking SACCOs, Automated Clearing House, Real-Time Gross Settlement, PerformanceAbstract
Purpose: Kenya’s SACCOs have not been left behind in embracing payment systems innovations. Despite adoption of such payment system innovations, the performance of SACCOs has been in the limelight. The purpose of this study was to assess the effect of national payment system innovations on performance of Deposit Taking SACCOs in Kenya.
Methodology: Anchored on Transaction Cost Innovation Theory, the study adopted a cross-sectional survey design. A sample of 122 deposit taking SACCOs were selected from a population of 176 using cluster sampling. The study employed a questionnaire for data collection. Data analysis was done using descriptive statistics (frequencies and percentages) and inferential statistics (bivariate regression). The study adhered to ethical considerations comprising of informed consent, confidentiality and anonymity, secure data storage and integrity throughout the research process.
Findings: National payment system innovations had a statistically significant positive effect on the performance of Deposit Taking SACCOs in Kenya (B = 0.493, β = 0.670, p < 0.001).
Unique Contribution to Theory, Practice and Policy: The study extends the application of Transaction Cost Innovation Theory to Deposit Taking SACCOs. In practice, it shows that the use of RTGS, ACH and integrated cash transfer systems improves the performance of deposit taking SACCOs. The study recommends policies that deepen the integration of SACCOs into the national payment system infrastructure.
Downloads
References
Agarwal, S., & Zhang, J. (2020). FinTech, lending and payment innovation: A review. Asia‐Pacific Journal of Financial Studies, 49(3), 353-367. https://doi.org/10.1111/ajfs.12294
Akter, S., Michael, K., Uddin, M. R., McCarthy, G., & Rahman, M. (2022). Transforming business using digital innovations: The application of AI, blockchain, cloud and data analytics. Annals of Operations Research, 1-33. https://doi.org/10.1007/s10479-020-03620-w
Babbie, E. R. (2020). The practice of social research. Cengage Au.
Bech, M. L., & Hancock, J. (2020). Innovations in payments. BIS Quarterly Review, March. Available at SSRN: https://ssrn.com/abstract=3561180
Central Bank of Kenya. (2021). Bank supervision annual report 2021. Nairobi: CBK .
Central Bank of Kenya. (2024). The Kenya electronic payment and settlement system report: December 2024. CBK report
Chipeta, C., & Muthinja, M. M. (2018). Financial innovations and bank performance in kenya: evidence from branchless banking models. South African Journal of Economic and Management Sciences, 21(1), 1-11. https://doi.org/10.4102/sajems.v21i1.1681
Cummings, C. L. (2018). Cross-sectional design. The SAGE Encyclopedia of Communication Research Methods. Thousand Oaks: SAGE Publications Inc. Retrieved. https://doi.org/10.4135/9781483381411.n118
Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340. https://doi.org/10.2307/249008
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Duarte, A., Frost, J., Gambacorta, L., Koo Wilkens, P., & Shin, H. S. (2022). Central banks, the monetary system and public payment infrastructures: Lessons from Brazil's Pix. Available at SSRN 4064528. https://dx.doi.org/10.2139/ssrn.4064528
Dugan, J. (2003). The challenges of financial innovation. China Bank Regulation Commission.
Hillowle, M., & Warui, F. (2021). Innovative banking practices and financial performance of commercial banks in kenya. International Journal of Current Aspects in Finance, Banking and Accounting, 3(1), 41-53. https://doi.org/10.35942/ijcfa.v3i1.180
International Monetary Fund (IMF). (2012). People’s republic of China detailed assessment report: CPSS core principles for systemically important payment systems. IMF eLibrary.
John, A. M., & Onsomu, Z. (2022). Effect of financial innovation on intermediation efficiency within the banking sector in Kenya. African Development Finance Journal, 4(4), 80-105. https://doi.org/10.66563/h4zm7024
Kayesi, V. M. (2025). The Influence of financial innovations on financial inclusion: evidence from regulated non-withdrawable Deposit-Taking Saccos in Nairobi County, Kenya (Doctoral dissertation, Strathmore University).
Keya, S. N. (2021). National payments system and operational efficiency of commercial banks in Kenya (Doctoral dissertation, Kenyatta University).
Kimotho, M., & Muturi, W. (2019). Effect of innovations on financial performance of microfinance institutions in Kenya. International Journal of Social Sciences and Information Technology, 5(3), 1-14.
Kiplangat, K. D., & Tibbs, C. (2018). Financial innovations and financial performance of commercial banks. International Journal of Innovative Research and Development, 7(5). https://doi.org/10.24940/ijird/2018/v7/i5/MAY18021
Lee, C. C., Li, X., Yu, C. H., & Zhao, J. (2021). Does fintech innovation improve bank efficiency? Evidence from China’s banking industry. International Review of Economics & Finance, 74, 468-483. https://doi.org/10.1016/j.iref.2021.03.009
Muhoro, D. I., & Mungai, J. (2018). Real time gross settlement and financial performance of commercial banks in Kenya. International Academic Journal of Economics and Finance, 3(1), 110-122. Available at http://www.iajournals.org/articles/iajef_v3_i1_110_122.pdf
Niehans, J. (1983). Financial innovation, multinational banking, and monetary policy. Journal of Banking & Finance, 7(4), 537-551. Available at https://econpapers.repec.org/scripts/redir.pf?u=http%3A%2F%2Fwww.sciencedirect.com%2Fscience%2Farticle%2Fpii%2F0378-4266%2883%2990011-0;h=repec:eee:jbfina:v:7:y:1983:i:4:p:537-551
Okoth, O. W., & Muia, L. (2020). Effects of financial innovations on financial performance of commercial banks in Kenya, A case study of Equity Bank of Kenya Ltd. International Journal of Interdisciplinary Research and Innovation, 8(1), 163-177. Available at http://www.researchpublish.com/
Peneder, M. (2022). Digitization and the evolution of money as a social technology of account. Journal of Evolutionary Economics, 32(1), 175-203. https://doi.org/10.1007/s00191-021-00729-4
SASRA. (2020). The Sacco Supervision Annual Report. Nairobi: SASRA.
SASRA. (2022). The Sacco Supervision Annual Report. Nairobi: SASRA.
SASRA. (2023). The Sacco Supervision Annual Report. Nairobi: SASRA.
Telukdarie, K., & Telukdarie, A. (2022). Digital ecosystems in financial services driven by embedded finance platforms in South Africa. Arnesh, Digital Ecosystems in Financial Services Driven by Embedded Finance Platforms in South Africa (November 23, 2022). https://dx.doi.org/10.2139/ssrn.4331766
Uwamariya, M., Loebbecke, C., & Cremer, S. (2020). Mobile banking impacting the performance of microfinance institutions: a case study from Rwanda. International Journal of Innovation and Technology Management, 17(01), 2050001. https://doi.org/10.1142/S0219877020500017
Wang, X., & Cheng, Z. (2020). Cross-sectional studies: strengths, weaknesses, and recommendations. Chest, 158(1), S65-S71. https://doi.org/10.1016/j.chest.2020.03.012
Yamane, T. (1967). Statistics: An introductory analysis (2nd ed.). Harper & Row.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Delfina Kaaniru Kithinji, Dr. Allan Muchemi Kuria, Dr. David Muchunu Magu
This work is licensed under a Creative Commons Attribution 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution (CC-BY) 4.0 License that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
