Bank Credit and Small Business Performance in Nigeria

Nelson Johnny; Jerome Joel Dieah

doi:10.56201/ijbfr.vol.12.no8.2026.pg104.116

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Bank Credit and Small Business Performance in Nigeria

Nelson Johnny and Jerome Joel Dieah

Abstract

This investigation assessed how bank credit on small-business performance in Nigeria across 1995–2025. Secondary information was drawn from the Central Bank of Nigeria Statistical Bulletin (2025). An ex-post facto design underpinned the investigation. The explanatory factors comprise the SME credit-accessibility rate, banks’ deposit liabilities and the lending rate on SMEs in Nigeria, whereas SMEs’ contribution to GDP serves as the dependent measure. The hypotheses were evaluated with time-series econometric procedures. Analysis employed the Augmented Dickey-Fuller procedure together with the Autoregressive Distributed Lag method. The stationarity test established that the series displayed a mixture of I(0) and I(1) integration orders, while the ARDL bounds test indicated an absence of a statistically meaningful long-run association among the variables, leading to emphasis on the short-run estimates. The findings showed that banks’ deposit liabilities exerted a positive and statistically significant influence on SMEs’ contribution to GDP, while the SME credit-accessibility rate showed a negative but statistically non-significant influence and the SME lending rate displayed a positive yet statistically non-significant influence on SMEs’ contribution to GDP in Nigeria. The study therefore concluded that bank credit significantly and positively influences small- business performance in Nigeria. Thus, the research proposed that commercial banks increase lending to viable SMEs, financial-sector authorities improve the conversion of credit accessibility into actual credit utilisation, and monetary authorities promote stable and affordable lending conditions to support sustainable SME financing and output growth in Nigeria.

Keywords

SME to GDP; Credit Accessibility RateDeposit LiabilitiesLending Rate; Nigeria.

References

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Bank Credit and Small Business Performance in Nigeria

Abstract

Keywords

References

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