Asian Journal of Economics, Finance and Management

The profitability of Savings and Credit Cooperative Societies (SACCOs) in Kenya has exhibited fluctuating trends despite their pivotal role in fostering financial inclusion and economic empowerment. Across Africa, SACCOs have experienced remarkable expansion as vehicles for mobilizing savings and providing affordable credit to low and middle-income populations. More than seven percent of Africa’s population is affiliated with cooperative organizations. In Laikipia County, several SACCOs have experienced profit declines or closure, largely due to competition, financial limitations, and weak management practices. Although numerous studies have explored the relationship between firm characteristics and profitability across different sectors, limited empirical evidence exists regarding SACCOs in Kenya. This study aimed to examine the effect of firm characteristics specifically firm age, liquidity, capital structure, and firm size on the profitability of SACCOs in Laikipia County. Anchored on the pecking order, agency, and information signalling theories, the study employed a causal research design utilizing secondary panel data from SACCO financial reports covering 2018–2022. A stratified random sample of 43 SACCOs was drawn from the 150 registered under the County Government of Laikipia. Data analysis involved descriptive statistics and panel regression techniques, complemented by diagnostic tests for multicollinearity, heteroskedasticity, and random effects. The regression model explained 71.8% of the variation in profitability (R² = 0.718). Results revealed that firm size (p = 0.005), liquidity (p = 0.011), capital structure (p = 0.037), and firm age (p = 0.026) significantly influenced profitability. The study concludes that larger and older SACCOs leverage economies of scale and institutional experience, while sound liquidity management and balanced capital structures enhance performance. The study recommends policy reviews to incorporate firm age and size in SACCO evaluation, alongside strategic asset expansion and prudent liquidity management. SACCO leaders and policymakers should promote capacity building and adopt technology-driven systems for financial planning and reporting. Regulatory bodies such as SASRA should revise policies to enhance profitability ratios, compliance, and risk management.