Abstract
In every economy of the world, the impact of the SME is not taken for granted as for all healthy economy, there must be a healthy SME due to the fact that, their contribution to the production volumes in terms of exports, innovations and the entrepreneur skills is vital for every economy to grow. There is a reasonable level of agreement among policy makers, theorists, economists, and business experts that small and medium enterprises (SMEs) are drivers of economic growth. SMEs’ access to credit has been a serious subject of debates to policy makers and researchers of both developed and developing economies based on the pivotal and significant role of SMEs’ in growing the private sector as well as the global economies as an extension to the nations. Hence, there is a need to examine the bank lending capacities to the SMEs’ in Nigeria and its effects on the Nigerian business environment, the impact of financial crisis in Nigeria on SMEs’ access to bank credit, in addition, to determine the impact of SMEs’ on the Nigerian economy. The study employed the use of secondary source of data in the relevant literatures and data generated from the Central Bank of Nigeria Bulletin, 2016 on Credit Accessibility to the SME sector in Nigeria from the year 1992-2015. An econometric analysis was used specifically regression analysis. The result confirmed that Bank lending capacity as one of the factors of financial crisis does affect the SMEs access to credit, and there is a strong and positive relationship between the SMEAC, Foreign Direct Investment, Interest Rate and Inflation while there is a strong and negative relationship between the SMEAC, GDP Total, CBTC and the Money Supplied. However, there is a weak relationship between the SMEAC and the SMEGDP and CBLSME. The result indicates that, as the Interest Rate and Inflation continue to increase it has a negative influence on the SMEs access to credit through the commercial banks. It is recommended to the Nigerian government that, economic policies that would favour the establishment of more SMEs with access to flexible credit facilities be made. In addition, the government needs to improve on the commercial bank lending capacities to the SMEs as this when positively managed will positively influence the contribution of the SMEs GDP Keywords : Financial Crisis, credit Accessibility, small and medium enterprises DOI : 10.7176/RJFA/10-1-05
Highlights
In every economy of the world, the impact of the small and medium enterprises (SMEs) is not taken for granted as for all healthy economy, there must be a healthy SME due to the fact that, their contribution to the production volumes in terms of exports, innovations and the entrepreneur skills is vital for every economy to grow
It is observed from the result that, the SME contribution to the gross domestic product, total gross domestic products, foreign direct investment, commercial bank total credit and money supplied do not Granger Cause the SMEs access to credit as the p-values are greater than the 5percent threshold while CBLSME and Inflation Granger Cause the SMEs access to credit. This shows that, the commercial bank loan to the small and medium enterprises as well as the inflation have visible effects on the SMEs access to credit which worth to be noted by the policy makers
It is deduced from the findings that, high interest rate on credit facilities to the SMEs in Nigeria has been a retarding force dragging the Nigerian economy backward such that the SMEs are reluctant to access credit facilities as they are not sure of how to manage the facilities to achieve the SMEs’ objectives
Summary
2.2 Model Analysis In management, the word “Environment” does not necessarily mean physical surroundings, but is used to describe all those influences that bear upon corporate organisations as it affect decision making in totality. 2.4 Financial Crisis in Nigeria Banks and other financial institutions are the established institutions where credit facilities are to be sought by SMEs in financing their businesses across the world Failure in their responsibilities due to some constraints such as government policies and market crashing as a result of the financial crisis has caused them not to be stable in their responsibilities.Today, according to research, a variety of situations which involves financial institutions’ assets losing a substantial part of their value is associated with the financial crisis which could be national, continental and/or global which as a result have a direct and a significant effect on the SMEs access to funds (Alexander,2017).
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