Abstract
This research paper explores how banks have impacted the growth of small and medium enterprises (SMEs) in Nigeria from 1991 to 2021. The review of existing literature discussed the challenges faced by SMEs due to the COVID-19 pandemic, which resulted in disruptions to both demand and supply. These disruptions caused revenue losses and a decrease in market confidence, further worsening liquidity constraints. The study employed a pair Granger causality test to investigate if loans from banks to SMEs influenced SME development over the research period. The variables examined included the proportion of SME contribution to GDP as an indicator of SME progress, bank loans extended to SMEs, the inflation rate (INF), and the exchange rate (EXCR). The findings reveal that neither commercial bank loans nor inflation impacted SME development without any evidence of causation. However, there was a relationship between exchange rates and SME growth. These results suggest a lasting connection between the factors studied. These outcomes recommend strengthening collaboration between the government and commercial banks to increase the share of loans directed towards SMEs for their advancement.
Published Version
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