IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 4 NO. 4 2018

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Effects of Microfinance Banks on Small Businesses’ Growth in Nigeria

Ofeimun, Godwin Omogbai, Nwakoby, C. and Izekor, Osaretin Andrew

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Abstract

Financing of small businesses in Nigeria by Micro Finance Banks has become an important policy choice in government’s economic programmes. This study seeks to examine the relevance of micro financing of small businesses in Nigeria. The data for the study was obtained from the Micro-finance banks and CBN annual reports for the period 1990 to 2015. The study adopted the ordinary least square regression as the basic techniques of analysis. The study also employed both normality and the multi-collinearity tests to examine the features of the data for analysis. The study, using the results of the micro financing of SMEs statistics and exploratory variables in a regression model showed that micro loan disbursed and micro loan spread have a significant positive relationship with small business growth in Nigeria during the period under review. The study also found a significant negative relationship between inflation rate and micro loan lending rate and small business growth as well as an insignificant relationship between micro loan spread and small business growth in Nigeria. The study therefore concludes that micro financing of small businesses by micro finance banks has a great effect in stimulating the economy. The study recommends amongst others that emphasis should be placed on lending to preferred sectors like agriculture and mining so as to stimulate growth of the economy.

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