The Influence of Bank Credit Financing on the Growth of SMEs in Nigeria

Abstract

This study examines the impact of bank credit financing on the growth of Small and Medium Scale Enterprises (SMEs) in Nigeria. It assesses the relationship between bank credit variables such as bank loan, savings and lending rates on SME growth. The study population was the SMEs in Nigeria, and employed secondary data obtained from the Central Bank of Nigeria’s statistical Bulletins over a 27-year period (1992 – 2022). An ex-post facto research design was employed to determine the attributed of the quantitative research. The study employed the auto-regressive distributed Lag length (ARDL) to determine the long run and short-run relationship between the dependent variable and independent variables. The findings reveals that bank credit to SME’s has positive insignificant effect on SME’s growth. Savings and tine deposit has positive significant effect on SME’s growth. Lending rate has positive insignificant effect on SME’s growth. Therefore, the bank should encourage savings and loans to provide adequate financing for SMEs expansion, which will thus have a significant effect on their growth.