Impact of Small and Medium Scale Enterprises Financing on Unemployment Rates in Nigeria: 1992-2021
Abstract
The study examined the impact of SMEs financing on unemployment rates in Nigeria for the period of 1992-2021. Data were collected on unemployment rate , bank credit (BC), aid and grant to SMEs , SMEs credit Scheme and per capita income . The study employs autoregressive distributed lagged model . The unit root test result shows that all the variables are stationary after first difference at 5% level of significance except AGS and BC that were stationary at level. The results further confirm the existence of long run relationship among the variables. The error correction model is negative and highly statistically significant; indicating the speed of adjustment of 58% which means that about 58% disequilibrium in previous period is restored into equilibrium in the subsequent periods. The major findings reveal that both in short and long run, bank credit BC have a negative significant impact on UMP in Nigeria, respectively. AGS has a positive statistically insignificant impact on UMP in short and long run, respectively. SCS has a positive and negative insignificant impact on UMP in short and long run, respectively. The study concludes that SMEs financing have significant impact on unemployment rate in Nigeria with bank credit remaining the most effective option for reduction in unemployment and job creation both in short and long term. Therefore, the study recommends that government through CBN should live up to its regulation role to ensure that bank lending should not only be accessible but also affordable by SMEs with proper supervision of commercial bank activities to comply with lending rules and regulations and government should sustain current level of aid to SMEs and advocate for more through Non-governmental organization and also create enabling environment for SMEs and NGO to thrive.
Keywords
SMEs FinancingUnemploymentARDLBank creditAid and Grant to SMEsSMEs credit Schemeper capita income.
References
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