Government Securities Investment and Financial Performance of Deposit-Taking Savings and Credit Co-Operative Societies in Kenya

Abstract

This study examined the influence of government securities investment on the financial performance of Deposit-Taking Savings and Credit Co-operative Societies (DT-SACCOs) in Kenya. Government securities, comprising treasury bills and treasury bonds, represent the investment dimension with the strongest theoretical and empirical link to SACCO financial outcomes as measured by Return on Assets (ROA). A descriptive research design was employed using census-based secondary panel data from all 44 licensed DT-SACCOs in Kenya for the period 2018–2023 (264 observations). Data were sourced from individual SACCO audited financial statements, SASRA reports, and SACCO websites. A fixed-effects panel regression model was applied following a Hausman specification test. Government securities investment had a positive and statistically significant influence on financial performance (Coef. = 0.5688, p < 0.001). The within-entity R-squared of 0.4127 indicates that over 41% of the variation in ROA is explained by this variable alone. DT-SACCOs should maintain and strategically expand allocations to government securities given their low-risk, predictable yield characteristics. Policymakers should design frameworks that incentivize SACCO investment in government instruments while ensuring appropriate maturity diversification across treasury bills and bonds.

Keywords: Government Securities, Treasury Bills, Treasury Bonds, DT-SACCOs, Financial Performance, Return on Assets