Abstract:
This research sought to determine the effects of capital structure on financial performance of
deposit taking SACCOS in Embu County. Capital structure refers· to how firms fund their
operations to enable them continue existing and grow. Many researchers have conducted
research on capital structure but have left many gaps that thi� research sought to close them. The
main objective of the research was the effects of debt, equity and retained earnings on financial
performance of SACCOS. Causal research design was used to conduct the research. All the 6
deposit taking SACCOS in Embu County were selected for study hence no sampling was done.
46 questionnaires were administered for data collection. SPSS' software was used to analyze data.
Debt had a significant effect on financial performance with a p-value of 0.020, equity had a
significant effect on the financial performance with a p-value of 0.021 while retained earnings
had no significant effect on financial performance with p-value of 0.73. In addition, the study
showed that equity is the cheapest source of capital followed by debt. The research concluded
and recommended that firms should strive to maintain an optimal capital structure.
