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Research Paper | Economics & Finance | Kenya | Volume 10 Issue 9, September 2021
Influence of Investment Opportunity Set on Dividend Payout among Deposit - Taking Saccos in Kenya
Solomon Munyoki Kathuo | Oluoch Oluoch | Agnes Njeru [18]
Abstract: This study explored the influence of investment opportunity set on Deposit - Taking Saccos in Kenya. The study was motivated by inconsistency in the ability of Saccos to live up to their promise of paying dividends to members consistently. Many of them pay dividends from unforeseen profits and/or while highly leveraged. These unhealthy dividend practices leave Saccos unable to pay dividends in the long term sustainably, besides exposing them to insolvency. Existing studies on the factors of dividend payout in Kenya mainly used unidimensional variables and/or were limited in sectoral scope. The present study targeted all registered DTSaccos in Kenya (n=179) over an eight - year period (2012 - 2019). A cross sectional design was used. Panel data modelling was used, which was a departure in methodology from previous studies. Descriptive results showed that investment opportunity set was below industry standards at 3%. During the panel period, Saccos failed to improve their ability to generate resources from equity yet, they sustained a high dividend payout. To maintain their dividend payout, the DT - saccos borrowed funds to pay dividends The findings deepen our understanding of the interplay of factors influencing dividend payout in DT - Saccos in Kenya. Small saccos have higher dividend payout compared to large ones. Indeed, small saccos use dividends as a business strategy to retain and attract new members, thereby augment their investment opportunity.
Keywords: Saccos, Dividends, Performance, dividend payout, Investment opportunity set
Edition: Volume 10 Issue 9, September 2021,
Pages: 643 - 648