EFFECTS OF COLLATERAL REQUIREMENT ON LOANS PROVISIONS: CASE STUDY OF SACCOS IN KENYA

The study sort to establish the relationship between collateral requirement and loan provision in SACCOs in Kenya. Descriptive survey research design and stratified random sampling method was used. The sample size used was 84 respondents comprising of three operation managers, four credit officers, three customer service officers and seventy-four registered saccos members. The study was guided by Classical interest, Keynesian Liquidity and Time preference theories. Results indicated that collateral requirements had great influence on loans provisions in SACCOs. The study recommended that SACCOsshould ensure collateral requirements policies are put in place in order to improve their loan portfolios and also consider using credit policy documents from other successful similar organizationsas a benchmark for best practices. The findings contributed to new knowledge to literature and theory.