Small and Medium Scale Business Financing and Its Effect on the Nigerian Economy: 1992 – 2021

Abstract

This study investigated the effect of small and medium scale business financing on the Nigerian economy. The ex-post facto research design was adopted and the dependent and independent variables were observed over the period, 1992 to 2021. The nature of data was secondary, sourced from the Central Bank of Nigeria Statistical Bulletin. The data were tested using the Eview statistical software adopting the Ordinary Least Square (OLS) method on the regression model adopted. The signs and significance of the regression coefficients was relied upon in explaining the nature and influence of the independent variable on the dependent variable as to determine both magnitude and direction of impact. The aprior expectation was that SME financing positively and significantly affect the Nigerian economy. The hypotheses were tested at 0.05 (5%) level of significance. Findings from the study showed that commercial bank loan to small and medium scale enterprises have positive and significant impact on GDP. Similarly, commercial bank loan to private sector has positive and significant impact on GDP. Hence, the study concludes that small and medium scale business financing has positive and significant impact on the Nigerian economy. Hence, it implies that SMEs financing contributes to economic growth in Nigeria. The study therefore recommends that the Federal Government of Nigeria through the Central Bank of Nigeria should prioritize financial inclusiveness in the small and medium scale sector of the economy to enhance availability and accessibility of investable funds in the sector.