Effect of micro finance bank on the growth of small and medium enterprises in Nigeria

Abstract

Microfinance banks are key to the growth and development of small and medium enterprises most especially in the wave of turbulence and unfavorable business environment, this is due to the fact that they provide short term facilities to SMEs. The study examined the relationship between micro finance bank and the growth of small medium enterprises in Nigeria. The descriptive survey design was adopted for the study. The population of the study consists of 100 selected SME’s operators within Wuse business area Abuja, Simple random sampling technique was use to arrive at a sample size of 100. In other to address the objective of the study, structured questionnaire was employed as the research instrument used to obtain relevant information from 100 respondents and were all filled and returned. Descriptive statistics, cross tabulation and simple linear regression were used to analyze the data collected. Findings revealed that micro finance banks domestic fund transfer services contribute to the growth of small and medium enterprises, this is revealed by the regression result (Beta =0.500; P = 0.000 < 0.05). Also, the study also discovered that repayable loans provided to small medium enterprises enhances the development of their businesses as revealed by the regression result (Beta = 1.074; P 0.000 < 0.05). The study concludes that there exists a positive relationship between micro finance bank and small medium enterprises. The study recommends that customers and beneficiaries of micro finance loans should avoid default in the repayment of loans. Furthermore, Microfinance banks should avoid charging high interest and much collaterals when granting loans.