DETERMINANTS OF COMMERCIAL BANKS FINANCING TO SMALL AND MEDIUM ENTERPRISES IN NIGERIA

This study examines the determinants of the commercial banks financing to small and medium enterprises in Nigeria. The study adopts ex-post facto design using secondary data collectedf rom annual reports and CBN Bulletin for the period of thirty (31) years spanning through 1988 to 2017. Ordinary Least Squares Method of Regression is used, and it isf ound that, lending rate has significant negative effect on loans to SMEs by DMBs. Similarly, a significant negative effect of nonperforming loans on loans to SMEs by DMBs in Nigeria is found. Conversely, an insignificant positive effect of capital adequacy ratio on loans to SMEs by DMBs in Nigeria is found. In the case of bank size in relation to its total assets, an insignificant positive effect on loans to SMEs by DMBs in Nigeria is also shown. Finally, an insignificant positive effect ofcustomers' deposits on loans to SMEs by DMBs in Nigeria is found, the study recommends among others that, DMBs should put in place stringent control measures that will reduce the rate and degree of nonperforming loans by SMEs. They should ensure that before any loan facility is granted to customer, such customer is thoroughly assessed to know his/her default probability.