The Impact of Deposit Money Banks’ Financing on Small and Medium Enterprises (SMEs) Performance in Nigeria 1981- 2022

Abstract

The study examined the deposit money banks financing, small and medium scale enterprises (SMEs) profit performance in Nigeria from 1981 to 2022 using autoregressive distributed lags techniques of analysis on data from the Central Bank of Nigeria and Bank of Industry. The research focuses on Deposit money banks credits, small and medium Scale enterprise profit performance in Nigeria. The credit to SMEs, aggregate deposit money banks loans, money supply, lending interest rate and inflation were the independent variables used for the study. Profit performance which was the dependent variable was measured using SMEs profitability. Regression results were used to test Hypothesis 1- 4. The results showed that credit to SMEs and aggregate deposit money banks loans were positive and significant at both short and long run. It was also found that money supply, lending interest rate and inflation showed varying level of significant relationships with the profit performance of small-scale business enterprises in Nigeria. The study recommends that the government should prioritize credit creation and administration strategies to SMEs in order to improve the profit performance of the SMEs in Nigeria. In addition, the monetary authorities and regulators should guarantee, re-invigorate and improve loans schemes by deposit money banks in Nigeria through appropriate credit policies. This of course will play the key role of loan creation, securitization and administration that will impact on the SMES in Nigeria.