SMEs finance as a panacea for the Eradication of corruption in the Banking Industry
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Date
2007-03-11
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ilorin journal of business and social sciences
Abstract
Over the years sundry interpretation has been given to corruption. It is the misuse of position to obtain personal and narrow interest over and above collective interest. Besides corruption, the inability of the SMEs to provide needed collateral, institutional bottlenecks, delay in processing and disbursement of loan have made the SMEs to prefer informal sources of finance over and above the formal sources. In this connection, the paper examines the credit system available to SMEs in Nigeria using the ordinary least square regression equation and it was observed that the formal banking sector precludes the SMEs in disbursing its loan. In this wise, the paper observes that at least eighty percent of informal agents in Ghana and Nigeria reported no delinquent borrowers and all expected virtually one hundred percent payment within three months of the date-due. The paper therefore recommends the need for the government through the central Bank of Nigeria to generate regulatory reforms that could cause institutional development and physical investment among the formal and informal financial institution in the country. The consolidated fund need be injected into the small scale industries through direct partnership with the formal finance agents.
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Keywords
SMEs,, Banking industry,, Corruption