Exploring the New Financing Initiative for SMEs: The Role of Nigeria’s Alternative Securities Market (ASeM)

Abstract

The role of the Alternative Securities Market (ASeM) in influencing funding, especially long-term finance, has been advocated in the world as well as in Nigeria. For being a pioneering study on the role ASeM plays in SME financing in Nigeria, this study tries to explore the effect of ASeM on SME equity finance for the quarterly period of 2013Q1 to 2021Q4. This quantitative study uses secondary data from the Securities and Exchange Commission (SEC) and the Central Bank of Nigeria (CBN). The Autoregressive distributed lag model (ARDL) approach is used for estimation, and the theory of information asymmetry is used to consider ASeM financing. From the study’s findings, it can be concluded that ASeM boosted SME financing in Nigeria, despite the detrimental effects from first-tier capital market, per capita income, inflation, interest rates and exchange rates. In accordance with the findings, the study recommends that the Alternative Securities Market is a significant way to improve funding to SMEs in the country. To support the Alternative Securities Market (ASeM) in Nigeria and improve financing for Small and Medium Enterprises (SMEs), several strategies can be implemented, to include regulatory Reforms that simplify listing requirements, reduce compliance costs, and enhance transparency can attract more SMEs to ASeM; capacity building to provide training programs and workshops for SMEs on how to prepare for listing on ASeM; investor education about the benefits of investing in SMEs listed on ASeM; and market promotion of ASeM as a viable platform for SME financing through marketing campaigns.

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