Nexus between Deposit Money Bank Facilities and Growth of Small and Medium Scale Enterprises in Nigeria

Ajayi, Olu ; Kolawole, Kayode ; Haorayau, Bolaji ; Ibrahim, Wasiu (2020)

The role of small and medium scale enterprises as an engine of growth and promoters for economic development in the world cannot be overemphasized. The problems bedeviling the SMEs in Nigeria are numerous such as inadequate capital and inaccessible credit facilities. It is upon this, this study examined the impact of access to finance on growth of small and medium scale enterprises in Nigeria. The study employed secondary data obtained from the Central Bank of Nigeria Statistical Bulletin. Autoregressive distributed lags model and granger causality test were used to analyze the data obtained for the study. The study revealed that deposit money banks’ loans and advances are significantly related to growth of SMEs in Nigeria with coefficient value of 1.336 at 5% level of significance while the study revealed that deposit money banks’ lending rates are negatively related to growth of SMEs in Nigeria with coefficient value of 1.601 at 5% level of significance. The study concluded that access to finance from deposit money banks affect growth of small and medium scale enterprises in Nigeria. It therefore, recommended that relative low interest rate finances should be provided to small and medium enterprises in Nigeria so as to enhance economic growth. The study also recommended that a national policy review that will increase the amount of bank loans to SMEs should be pursed so as to realize the desired corporate and national goals.

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