COMMERCIAL BANKS’ LENDING AND THE GROWTH OF SMALL AND MEDIUM ENTERPRISES (SMES) CREDIT IN NIGERIA

Date

2012-04-11

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Department of Enterprenuership, Nasarawa State University, Keffi

Abstract

The Small and Medium Scale Enterprises (SMEs) in Nigeria which are regarded as the engine room for employment generation, poverty reduction, rapid and sustainable industrialization as well as economic growth and development, etc. have been militated against by numerous problems such as inadequate infrastructural facilities, high rate of enterprise mortality, poor implementation of economic policies and a plethora of others. Therefore, this research evaluated the effect of commercial banks' lending on the growth of SMEs in Nigeria. This study made use of secondary data to achieve its results through econometric analysis by way of multiple regressions. The findings of the research indicated that commercial banks' total credit have negative impact on the growth of SMEs in Nigeria. However, there is a positive relationship between their maximum lending rate of interest and lending to the SMEs sub-sector which is in conformity with the theoretical underpinning adopted for this work. This study therefore, recommended that government should facilitate the availability of and access to loans and equity finance, particularly medium to long term opportunities to improve trade and investment capacity of SMEs.

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Citation

Schiller, B. R. (2007): The Economics of Poverty and Discrimination, published Prentice-Hall, New Jersey. Ugwushi, B. (2009): “SMEs Key Failure-Factors.” A Comparism Between the United Kingdom and Nigeria. Journal of Social Science 18(3): pg 199-207. United Nations Report for Several Years. World Bank (2001): “World Development Report 2001" Washington, Oxford University Press for the World Bank. World Bank Report (2005): “World Development'\ Washington, Oxford University Press for World Bank.

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