SMEs Formal Funding, a Lubricant for Economic Performance: The Nigerian Experience

Abstract

This study examined the relationship between Small and medium scale enterprises formal sources of funding and economic performance of Nigeria, for the period 1992 to 2018. We adopted secondary data that were sourced from the central bank of Nigeria statistical bulletin. We conducted unit root test, Bound co-integration test and auto regressive distributive lag tests. The tests revealed that, in the long run, Microfinance Banks credit is statistically significant in promoting economic performance of Nigeria. While, Bank of Agriculture credit and bank of industry credit were found not to be statistically significant in promoting Nigeria’s economic performance. However, jointly, credits from the banks studied have a positive relationship with the performance of Nigeria’s economy as represented by the GDP. The study therefore recommends that, access to microfinance credit by SMEs should be sustained, while the relevant agencies should work to improve the relationship between credits by Banks of Agriculture and Industry to Small and Medium Enterprises.