Impact of Microfinance Banks’ Facilities on Performance of Small and Medium Scale Enterprises in Nigeria

Abstract

The problems bedeviling the SMEs in Nigeria are multi-faceted such as inadequate capital and inaccessible credit facilities. It is upon this that the study examined the impact of microfinance banks’ facilities on performance of small and medium scale enterprises in Nigeria. The study employed secondary data obtained from the Central Bank of Nigeria statistical bulletin from year 1991 to 2020. Autoregressive distributed lags model was used to analyze the data obtained for the study. The study revealed that microfinance banks’ loans and advances are significantly related to performance of SMEs in Nigeria at 5% level of significance. Furthermore, the study revealed microfinance banks’ deposit mobilization had significant impact on performance of SMEs in Nigeria. Finally, the study revealed that banks’ lending rates are negatively related to performance of SMEs in Nigeria with coefficient value of 1.601 and at 5% level of significance. The study therefore, recommended that relative low interest rate finances should be provided to small and medium enterprises in Nigeria so as to enhance economic growth.