IMPLICATIONS OF BANK CREDITS IN DEEPENING SMALL AND MEDIUM SCALE ENTERPRISES (SMES) PERFORMANCE IN NIGERIA
Abstract
This research assesses the implications of bank credits in deepening small and
medium scale enterprises (SMEs) performance in Nigeria, spanning the period from
1990 to 2022. The indicators used for bank credits are private sector credit,
agricultural sector credit, manufacturing sector credit, credit to SMEs, and the
lending rate while SMEs output is used as proxy for small and medium scale
enterprise (SMEs) performance. The study was anchored on Pecking Order Theory.
Annual time data series for the study were gathered from the Central Bank of Nigeria
(CBN) Statistical Bulletin and reports from the National Bureau of Statistics (NBS),
and were analyzed using Augmented-Dickey Fuller (ADF) unit root test, the Bound
cointegration test statistic, and the Autoregressive Distributive Lag (ARDL) approach.
The research established that providing market friendly credit to the private sector
and the agricultural sector positively but insignificantly influenced SMEs’ output in
Nigeria. Conversely, credit to the manufacturing sector and the SMEs positively and
significantly impacted on SMEs output while lending rate had negative and
significant impact on the regressand. The study concluded that bank credits play
significant positive role in deepening small and medium scale enterprises (SMEs)
performance in Nigeria over the sampled period. It is recommended among others
that deposit money banks should favourably extend more market friendly credits to
small and medium scale enterprises (SMEs) to enhance their performance in the
economy
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Published in JOURNAL OF BUSINESS & ECONOMY
ISSN: 2808-5428
This article appears in our peer-reviewed academic journal
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