Financing of Small and Medium-Scale Enterprises (SMEs) and Economic Growth in Nigeria
Keywords:
Small and medium scale enterprises, credit to private sector, lending rate, interest rate
Small and medium scale enterprises, credit to private sector, lending rate, interest rate
Abstract
The financing of small and medium-scale enterprises (SMEs) is a crucial aspect of economic development in Nigeria. However, SMEs often face significant challenges in accessing finance, hindering their growth and potential contributions to the economy. This study examines the role of deposit money banks in supporting SME financing in Nigeria using Central Bank of Nigeria (CBN) statistical bulletin and National Bureau of Statistics fact book (NBS) covering the period of 1990 – 2022 on yearly basis with E-view. The study found out that bank credit to small and medium scale enterprises, credit to private sector, lending rate, interest rate have positive and significant effect on gross domestic product. This study recommend that bank should enhance financial inclusion, simplify loan application processes, develop risk mitigation mechanisms, strengthen financial literacy and advisory services, foster collaboration in other to provide financing opportunities to small and medium-scale enterprises
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References
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Adegbite, S. A., Osabuohien, E. S., & Alege, P. O. (2019). Determinants of access to finance for small and medium-sized enterprises in Nigeria: Evidence from the 2013/2014 demand-side survey. Journal of African Business, 20(3), 369-388.
Adewumi, O. O., & Olokoyo, F. O. (2019). Prime lending rate and lending to small and medium enterprises in Nigeria. Journal of Economic Development, 44(2), 1-22.
Adofu, I., & Abu, N. (2016). Determinants of bank lending to small and medium scale enterprises in Nigeria. Journal of Accounting and Financial Management, 2(2), 1-11.
Agarwal, S., & Garg, P. (2017). Financing small and medium-sized enterprises in India: Challenges and opportunities. Journal of Global Entrepreneurship Research, 7(1), 1-15.
Agwu, M. O., & Emeti, C. I. (2018). Financing small and medium scale enterprises in Nigeria: The role of deposit money banks. International Journal of Business and Management Review, 6(1), 14-27.
Akanbi, A. F., & Oloyede, O. I. (2019). Analysis of the impact of microfinance on small and medium scale enterprises development in Nigeria. Journal of Economics and Sustainable Development, 10(13), 129-137.
Akingunola, R. O., & Oyebisi, T. O. (2021). Analysis of the impact of macroeconomic factors on small and medium enterprises’ access to finance in Nigeria. Journal of Innovation and Entrepreneurship, 10(1), 1-25.
Alimi, R. S., Adeyemo, R. A., & Adeyemo, O. A. (2018). Small and medium enterprises (SMEs) financing and economic growth in Nigeria: An empirical investigation. Journal of Accounting and Financial Management, 4(3), 36-50.
Alper, D., & Ucer, M. (2015). The determinants of SMEs' access to finance: Evidence from Turkey. Journal of Banking & Finance, 56, 15-26.
Anyanwu, C. M., & Okeke, C. C. (2019). Financial access, banking sector development and economic growth in sub-Saharan Africa. Journal of African Business, 20(4), 528-549.
Ayuba, B., & Zubairu, M. (2015). Impact of banking sector credit on the growth of small and medium enterprises (SME’s) in Nigeria. Journal of Resources Development and Management Journal, 15, 1–9.
Ayozie, D. O., & Akinlabi, B. H. (2019). Small and medium enterprises (SME’s) and the Nigerian Economy: An Overview. Journal of Economics and Sustainable Development, 10(3), 25-32.
Barney, Jay B., 2001, Gaining and Sustaining Competitive Advantage, Addison Westley Reading, Mass. Boston.
Benson, M. O. (2017). Bank credits and its impact on Nigerian economic growth. International Journal of Development Strategies in Humanities, Management and Social Sciences, 7(3), 39-52.
Bhatia, S. (2019). Financing of SMEs in India: A study of the challenges and prospects of bank credit. International Journal of Financial Management, 9(2), 40-52.
CBN. (2021). Guidelines for accessing credit facility by SMEs. Retrieved from https://www.cbn.gov.ng/Out/2021/FPRD/GUIDELINES%20FOR%20ACCESSING%20CREDIT%20FACILITY%20BY%20SMEs.pdf
Daramola, G. O., & Adejumo, A. V. (2018). Access to finance and performance of small and medium enterprises in Nigeria. International Journal of Economics, Commerce and Management, 6(4), 63-79.
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160.
Dinh, T. H., Phan, T. H. T., & Nguyen, H. T. (2019). Determinants of SMEs’ access to finance: Evidence from Vietnam. Journal of Risk and Financial Management, 12(4), 192.
Evbuomwan, G. O., Okoruwa, V. O., & Ikpi, A. E. (2013). Effect of deposit money banks' credit on the performance of micro, small and medium enterprises in Nigeria. CBN Economic and Financial Review. 51(2), 63-91.
Imoisi A.I & Ephraim (2015). Small and Medium Scale Enterprises and Economic Growth in Nigeria. International Journal of Business and Management; 10(3) 203-216
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Kawugana, A. (2018). Impact of First Bank of Nigeria Plc on financing small and medium scale enterprises in Gombe and Bauchi State ,. 6(4), 58–66.
Ndukwe, O. J. & Allison, P. (2021). Good Governance and Ease of Doing Business in Nigeria: Problems and Prospects. International Journal of Academic Management Science Research, 5, 88-96. Retrieved from www.ijeais.org/ijamsr.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Ochinanwata, J., & Ochinanwata, N. (2023). The Impact of Digital Platforms on SMEs’ Development and Performance. In Small Business and Entrepreneurial Development in Africa: A Route to Sustained Economic Development (pp. 179-194). Cham: Springer Nature Switzerland.
Ogunrinola, I. O., & Ogbari, M. E. (2019). Access to finance by SMEs in Nigeria: A review of literature. Academy of Strategic Management Journal, 18(6), 1-9.
Oladele, O. I., & Gbadeyan, R. A. (2017). Financing small and medium scale enterprises in Nigeria: The role of microfinance banks. Journal of Economics and Sustainable Development, 8(4), 143-151.
Olaoye, C. O., Adedeji, A. Q., & Agbaje, R. A. A. (2018). Commercial bank lending to small and medium scale enterprises and Nigeria economy. Journal of Accounting, Business and Finance Research, 4(2), 49–55. https://doi.org/10.20448/2002.42.49.55
Oluwarotimi, A. O. and Adamu, N. (2017). Deposit money bank credit to small and medium enterprises, socio-economic performance and economic growth in Nigeria. International Journal of Development and Sustainability, 6(10), 1400-1417
Ogbuji, C. N. (2019). Financing small and medium scale enterprises in Nigeria: Issues and challenges. African Journal of Business and Economic Research, 14(2), 45-62.
Ojo, O. O. (2020). Financing small and medium enterprises (SMEs) in Nigeria: The role of microfinance banks. International Journal of Research and Innovation in Social Science (IJRISS), 4(10), 29-38.
Olowookere , J. K., Hassan , C. O., Adewole , A. O., & Aderemi, T. A. (2021). Small and Medium Scale Enterprises (SMES) Financing and Sustainable Economic Growth in Nigeria: Array. The Journal of Accounting and Management, 11(1).
Onyeiwu, C., Muoneke, O. B., & Nkoyo, U. (2021). Financing of small and medium scale enterprises and its growth impact in Nigeria. The Journal of Entrepreneurial Finance, 22(2), 3.
Owolabi, O., & Nasiru, A. (2017). Deposit money bank credit to small and medium enterprises, socio-economic performance and economic growth in Nigeria. International Journal of Development and Sustainability, 6(10), 1218–1485.
Patrick H. T (1996): “Financial Development and economic growth in underdeveloped countries” Economic Development and Cultural Change. 14(2),174-7
Peter, G., Ph, E., & Apiri, T. R. (2020). Nexus between loanable funds and performance of small and medium scale enterprises in Nigeria: Empirical Evidence. VII(Iii), 170–182.
Peter, B., & Olufemi, A. (2023). Overcoming the Challenges Confronting Startups in Nigeria. European Business & Management, 9(2), 32-42.
Richard, Z. (2016). Small and medium enterprises financing and economic growth in
Malawi. Research Gate, 1-14.
Saunders, A., & Cornett, M. M. (2014). Financial institutions management: A risk management approach. McGraw Hill.
Somoye, R.O. C. (2018). The impact of finance on entrepreneurship growth in Nigeria: International Journal of Small and Medium Enterprises, 1(2), 117-227.
Tahir, H. M., Ibrahim, A., & Babawulle, D. H. (2021). Small and medium scale enterprises (SMEs) performance and economic growth nexus in Nigeria: ARDL-bound testing evidence. Asian Journal of Economics, Finance and Management, 540-561.
Udegbunam, I. P., Udeoba, C. E., Ndu-Anunobi, G. U., & Abasili, K. N. (2024). Talent Acquisition for Small and Medium-sized Enterprises (SMEs) in Nigeria: Analysis of Challenges and Potential Solutions. International Journal of Social Science and Management Studies, 3(1).
Adegbite, S. A., Osabuohien, E. S., & Alege, P. O. (2019). Determinants of access to finance for small and medium-sized enterprises in Nigeria: Evidence from the 2013/2014 demand-side survey. Journal of African Business, 20(3), 369-388.
Adewumi, O. O., & Olokoyo, F. O. (2019). Prime lending rate and lending to small and medium enterprises in Nigeria. Journal of Economic Development, 44(2), 1-22.
Adofu, I., & Abu, N. (2016). Determinants of bank lending to small and medium scale enterprises in Nigeria. Journal of Accounting and Financial Management, 2(2), 1-11.
Agarwal, S., & Garg, P. (2017). Financing small and medium-sized enterprises in India: Challenges and opportunities. Journal of Global Entrepreneurship Research, 7(1), 1-15.
Agwu, M. O., & Emeti, C. I. (2018). Financing small and medium scale enterprises in Nigeria: The role of deposit money banks. International Journal of Business and Management Review, 6(1), 14-27.
Akanbi, A. F., & Oloyede, O. I. (2019). Analysis of the impact of microfinance on small and medium scale enterprises development in Nigeria. Journal of Economics and Sustainable Development, 10(13), 129-137.
Akingunola, R. O., & Oyebisi, T. O. (2021). Analysis of the impact of macroeconomic factors on small and medium enterprises’ access to finance in Nigeria. Journal of Innovation and Entrepreneurship, 10(1), 1-25.
Alimi, R. S., Adeyemo, R. A., & Adeyemo, O. A. (2018). Small and medium enterprises (SMEs) financing and economic growth in Nigeria: An empirical investigation. Journal of Accounting and Financial Management, 4(3), 36-50.
Alper, D., & Ucer, M. (2015). The determinants of SMEs' access to finance: Evidence from Turkey. Journal of Banking & Finance, 56, 15-26.
Anyanwu, C. M., & Okeke, C. C. (2019). Financial access, banking sector development and economic growth in sub-Saharan Africa. Journal of African Business, 20(4), 528-549.
Ayuba, B., & Zubairu, M. (2015). Impact of banking sector credit on the growth of small and medium enterprises (SME’s) in Nigeria. Journal of Resources Development and Management Journal, 15, 1–9.
Ayozie, D. O., & Akinlabi, B. H. (2019). Small and medium enterprises (SME’s) and the Nigerian Economy: An Overview. Journal of Economics and Sustainable Development, 10(3), 25-32.
Barney, Jay B., 2001, Gaining and Sustaining Competitive Advantage, Addison Westley Reading, Mass. Boston.
Benson, M. O. (2017). Bank credits and its impact on Nigerian economic growth. International Journal of Development Strategies in Humanities, Management and Social Sciences, 7(3), 39-52.
Bhatia, S. (2019). Financing of SMEs in India: A study of the challenges and prospects of bank credit. International Journal of Financial Management, 9(2), 40-52.
CBN. (2021). Guidelines for accessing credit facility by SMEs. Retrieved from https://www.cbn.gov.ng/Out/2021/FPRD/GUIDELINES%20FOR%20ACCESSING%20CREDIT%20FACILITY%20BY%20SMEs.pdf
Daramola, G. O., & Adejumo, A. V. (2018). Access to finance and performance of small and medium enterprises in Nigeria. International Journal of Economics, Commerce and Management, 6(4), 63-79.
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147-160.
Dinh, T. H., Phan, T. H. T., & Nguyen, H. T. (2019). Determinants of SMEs’ access to finance: Evidence from Vietnam. Journal of Risk and Financial Management, 12(4), 192.
Evbuomwan, G. O., Okoruwa, V. O., & Ikpi, A. E. (2013). Effect of deposit money banks' credit on the performance of micro, small and medium enterprises in Nigeria. CBN Economic and Financial Review. 51(2), 63-91.
Imoisi A.I & Ephraim (2015). Small and Medium Scale Enterprises and Economic Growth in Nigeria. International Journal of Business and Management; 10(3) 203-216
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3(4), 305-360.
Kawugana, A. (2018). Impact of First Bank of Nigeria Plc on financing small and medium scale enterprises in Gombe and Bauchi State ,. 6(4), 58–66.
Ndukwe, O. J. & Allison, P. (2021). Good Governance and Ease of Doing Business in Nigeria: Problems and Prospects. International Journal of Academic Management Science Research, 5, 88-96. Retrieved from www.ijeais.org/ijamsr.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Ochinanwata, J., & Ochinanwata, N. (2023). The Impact of Digital Platforms on SMEs’ Development and Performance. In Small Business and Entrepreneurial Development in Africa: A Route to Sustained Economic Development (pp. 179-194). Cham: Springer Nature Switzerland.
Ogunrinola, I. O., & Ogbari, M. E. (2019). Access to finance by SMEs in Nigeria: A review of literature. Academy of Strategic Management Journal, 18(6), 1-9.
Oladele, O. I., & Gbadeyan, R. A. (2017). Financing small and medium scale enterprises in Nigeria: The role of microfinance banks. Journal of Economics and Sustainable Development, 8(4), 143-151.
Olaoye, C. O., Adedeji, A. Q., & Agbaje, R. A. A. (2018). Commercial bank lending to small and medium scale enterprises and Nigeria economy. Journal of Accounting, Business and Finance Research, 4(2), 49–55. https://doi.org/10.20448/2002.42.49.55
Oluwarotimi, A. O. and Adamu, N. (2017). Deposit money bank credit to small and medium enterprises, socio-economic performance and economic growth in Nigeria. International Journal of Development and Sustainability, 6(10), 1400-1417
Ogbuji, C. N. (2019). Financing small and medium scale enterprises in Nigeria: Issues and challenges. African Journal of Business and Economic Research, 14(2), 45-62.
Ojo, O. O. (2020). Financing small and medium enterprises (SMEs) in Nigeria: The role of microfinance banks. International Journal of Research and Innovation in Social Science (IJRISS), 4(10), 29-38.
Olowookere , J. K., Hassan , C. O., Adewole , A. O., & Aderemi, T. A. (2021). Small and Medium Scale Enterprises (SMES) Financing and Sustainable Economic Growth in Nigeria: Array. The Journal of Accounting and Management, 11(1).
Onyeiwu, C., Muoneke, O. B., & Nkoyo, U. (2021). Financing of small and medium scale enterprises and its growth impact in Nigeria. The Journal of Entrepreneurial Finance, 22(2), 3.
Owolabi, O., & Nasiru, A. (2017). Deposit money bank credit to small and medium enterprises, socio-economic performance and economic growth in Nigeria. International Journal of Development and Sustainability, 6(10), 1218–1485.
Patrick H. T (1996): “Financial Development and economic growth in underdeveloped countries” Economic Development and Cultural Change. 14(2),174-7
Peter, G., Ph, E., & Apiri, T. R. (2020). Nexus between loanable funds and performance of small and medium scale enterprises in Nigeria: Empirical Evidence. VII(Iii), 170–182.
Peter, B., & Olufemi, A. (2023). Overcoming the Challenges Confronting Startups in Nigeria. European Business & Management, 9(2), 32-42.
Richard, Z. (2016). Small and medium enterprises financing and economic growth in
Malawi. Research Gate, 1-14.
Saunders, A., & Cornett, M. M. (2014). Financial institutions management: A risk management approach. McGraw Hill.
Somoye, R.O. C. (2018). The impact of finance on entrepreneurship growth in Nigeria: International Journal of Small and Medium Enterprises, 1(2), 117-227.
Tahir, H. M., Ibrahim, A., & Babawulle, D. H. (2021). Small and medium scale enterprises (SMEs) performance and economic growth nexus in Nigeria: ARDL-bound testing evidence. Asian Journal of Economics, Finance and Management, 540-561.
Udegbunam, I. P., Udeoba, C. E., Ndu-Anunobi, G. U., & Abasili, K. N. (2024). Talent Acquisition for Small and Medium-sized Enterprises (SMEs) in Nigeria: Analysis of Challenges and Potential Solutions. International Journal of Social Science and Management Studies, 3(1).
Published
2024-08-22
How to Cite
SoyemiK. A., OlowofelaO., & AriyibiM. (2024, August 22). Financing of Small and Medium-Scale Enterprises (SMEs) and Economic Growth in Nigeria. Journal of Economic, Management, Accounting and Technology, 7(2), 486-498. https://doi.org/https://doi.org/10.32500/jematech.v7i2.6754
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Articles
