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The importance of Savings and Credit Cooperatives (SACCOs) cannot be underestimated. Despite their importance, they are faced with numerous challenges among them financial distress which threatens their very existence. The current research sought to establish the role of board characteristics in the financial distress suffered by Deposit Taking SACCOs in Nairobi County. The study is anchored inter alia on Agency Theory. Descriptive research design was adopted while Nairobi County was purposively chosen and a census was carried out on deposit taking SACCOs in the county. Secondary data was collected from SASRA using a data collection sheet and a panel data analysis performed using STATA software. The findings were presented using tables. The study concluded that there was a relationship between board characteristics and financial distress of Deposit Taking SACCOs where board composition, board education and board tenure have statistically significant and negative influence on financial distress. In conclusion SACCOs need to have lean boards, Board composition should also be improved by including more women on boards, there should be more inclusion of members with high and relevant education credentials, and SACCOs should have term limits for their members while an analysis too based on the Altman’s Z score models should be adopted for SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.

Related party transactions are a key factor to the sustainability of Savings and Credit Cooperatives (SACCOs). In view of this fact, loans to directors and staff are viewed as a factor which can greatly influence savings and credit cooperatives into either falling into financial distress or helping them to remain a float and become financially stable entities. The stakeholder theory holds that entities should be managed a manner that will satisfy every stakeholder. The stewardship theory reiterates that managers have the organisation at heart and can it to profitability as if it were their own. However approval of loans and other transactions to managers and staff, may not positively impact the entity. This study was designed to establish the effect of related party transactions on the relationship between board characteristics and financial distress of deposit taking SACCOs in Nairobi County. We applied Descriptive research design on Deposit taking SACCOs in Nairobi County which was identified purposively while a census was conceded for all deposit taking SACCOs in the county. We obtained secondary data from SASRA using a data collection sheet after which we performed panel data analysis by use of STATA software. Findings were presented using tables. The study concluded that related party transactions influenced the relationship between board characteristics and financial distress of Deposit Taking SACCOs in Nairobi County. Related party transactions can be an avenue of causing financial distress and should be kept as low as possible. The regulator should come up with a tool based on Altman’s Z score models to predict financial distress in SACCOs in order to offer timely advice to alleviate more distress and consequent bankruptcy which may lead to closure of SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.

Related party transactions are a key factor to the sustainability of Savings and Credit Cooperatives (SACCOs). In view of this fact, loans to directors and staff are viewed as a factor which can greatly influence savings and credit cooperatives into either falling into financial distress or helping them to remain a float and become financially stable entities. The stakeholder theory holds that entities should be managed a manner that will satisfy every stakeholder. The stewardship theory reiterates that managers have the organisation at heart and can it to profitability as if it were their own. However approval of loans and other transactions to managers and staff, may not positively impact the entity. This study was designed to establish the effect of related party transactions on the relationship between board characteristics and financial distress of deposit taking SACCOs in Nairobi County. We applied Descriptive research design on Deposit taking SACCOs in Nairobi County which was identified purposively while a census was conceded for all deposit taking SACCOs in the county. We obtained secondary data from SASRA using a data collection sheet after which we performed panel data analysis by use of STATA software. Findings were presented using tables. The study concluded that related party transactions influenced the relationship between board characteristics and financial distress of Deposit Taking SACCOs in Nairobi County. Related party transactions can be an avenue of causing financial distress and should be kept as low as possible. The regulator should come up with a tool based on Altman’s Z score models to predict financial distress in SACCOs in order to offer timely advice to alleviate more distress and consequent bankruptcy which may lead to closure of SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.

The importance of Savings and Credit Cooperatives (SACCOs) cannot be underestimated. Despite their importance, they are faced with numerous challenges among them financial distress which threatens their very existence. The current research sought to establish the role of board characteristics in the financial distress suffered by Deposit Taking SACCOs in Nairobi County. The study is anchored inter alia on Agency Theory. Descriptive research design was adopted while Nairobi County was purposively chosen and a census was carried out on deposit taking SACCOs in the county. Secondary data was collected from SASRA using a data collection sheet and a panel data analysis performed using STATA software. The findings were presented using tables. The study concluded that there was a relationship between board characteristics and financial distress of Deposit Taking SACCOs where board composition, board education and board tenure have statistically significant and negative influence on financial distress. In conclusion SACCOs need to have lean boards, Board composition should also be improved by including more women on boards, there should be more inclusion of members with high and relevant education credentials, and SACCOs should have term limits for their members while an analysis too based on the Altman’s Z score models should be adopted for SACCOs. Another research may be carried out to establish other factors causing financial distress and how to turn around the SACCOs already in distress.