Title:
Effect of Retention Practices on Interest Payment Among Non-Withdrawable Deposit Taking Saccos in Kenya: A Machine Learning Approach

Authors:
Samwel Ngugi & Dr. Liliam Mwenda, Kenya

Abstract:

Non-Withdrawable Deposit Taking Sacco’s (NWDT’s) play a critical role of financial intermediation for socio-economic development in a Country. The objective this study was to examine the effect of retention practices on interest payment among NWDT Saccos in Kenya. The study applied a positivism research philosophy and a cross-section approach to descriptive research design.  The sampling frame and unit of analysis was the 185 licensed NWDT Saccos in Kenya as at December 2020. The unit of response was 280 managers from a proportionate sample of 56 NWDT Saccos. A closed ended questionnaire was used to collect primary data for the retention practices and a secondary data collection sheet for interest payment.  A pre-test for the questionnaire was carried out using managers of three NWDT Saccos in Nairobi, Kenya. The Kaiser-Meyer-Olkin (KMO) coefficient and Bartlett’s Chi-Square from Confirmatory Factor Analysis were used to enhance construct validity. The data was tested for Gaussian distribution, linearity and autocorrelation. Ordinary Least Squares was used for testing hypothesis. The study found that 35.1% of the variations in interest payment was explained by retention practices and that there is a statistically significance influence of these practices on interest payment among NWDT Saccos. Despite the challenges within the Sacco sector and the wider external environment influencing its performance, consistency in application of retention policies might be a best practice. This is because the same can instil within the management and the board, the discipline of prudent investment that yield a minimum return in every investment decision. Additionally, the reserves rate can be a great score card for the management of these NWDT Saccos in Kenya.

DOI: https://doi.org/10.51505/IJEBMR.2025.9911