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DETERMINANTS OF BANK LENDING AND CREDIT ACCESSIBILITY OF MICRO, SMALL AND MEDIUM ENTERPRISES

Year 2022, Volume: 10 Issue: 3, 299 - 313, 31.12.2022
https://doi.org/10.22139/jobs.1093265

Abstract

Aim: The aim of the study is, besides other things, to establish the extent in which determinants of bank lending are implemented in association with the performance of micro, small and medium enterprises in Nigeria.
Method: The study applied the econometrics method of data analysis. Secondary data for the research were gathered from the Central Bank of Nigeria's Statistical Bulletin, which has a long history of providing accessible, adequate, accurate, and reliable data. Multiple regression analysis was used in conjunction with Stata software.
Findings: The study shows that bank size has a significant influence on bank lending to MSMEs, the regression coefficient further reveals that bank size is negatively associated with bank lending to MSMEs, this implies that an increase in bank size will not always bring about an increase in bank lending to MSMEs. The finding also shows that credit risk and bank liquidity have a significant influence on bank lending to MSMEs, the regression result further reveals that credit risk is negatively associated with bank lending to MSMEs, thus implying that an increase in credit risk will cause a decrease in lending to MSMEs in the same vein liquidity ratio was found to be positively related to bank lending to MSMEs, thus implying that higher liquidity ratio will propel higher bank lending to MSMEs. Finally, the finding shows that the volume of deposits and interest rates have a significant relationship with bank lending to MSMEs. The regression result further reveals that interest rate is negatively associated with bank lending to MSMEs, thus implying that an increase in interest rate will cause a decrease in bank lending to MSMEs. In the same vein volume of deposits was found to be positively related to bank lending to MSMEs, thus implying that an increase in the volume of deposits will cause an increase in bank lending to MSMEs
Results: The study concluded that the determinants of bank lending have an effect on the access to capital and the development of MSMEs in Nigeria. The research suggested that banks should develop an alternative financing strategy that would alleviate lending constraints to MSMEs. This is because MSMEs are subjected to strict terms and conditions by banks, prompting them to seek other sources of funding that may be insufficient to finance their operations and ensure their survival.

References

  • Afolabi, A. A. & Oni, E. O. (2016), Effect of micro-finance banks on micro, small and medium scale enterprises (MSMEs) in Nigeria. Management Review Journal, 6(12), 7-19
  • Afolabi M.O (2013) Growth effect of small and medium enterprises (SMEs) financing in Nigeria, Journal of Africa Macro-Economic Review. 3 (1), 193-205.
  • Akingunola, R. O. (2011). Small and Medium Scale Enterprises and Economic Growth in Nigeria: An Assessment of Financing Options, Pakistan Journal of Business and EconomicReview, 2(1, 78-97.
  • Agyapong, D. Agyapong, G. K.Q. & Darfor, K. N. (2011), Criteria for assessing small and medium enterprises borrowers in Ghana. International Business Research, 4 (4), 132-138
  • Alhassan, F. & Sakara, A. (2014). Socio-economic determinants of small and medium enterprises (SMEs) Access to credit from the Barclays Bank in Tamale-Ghana, International Journal of Humanities & Social Science Studies, I (2), 26-36
  • Ana, I. (2008), Nigerians and micro financing. A paper presented at the 5th Nigeria- German Business Group Conference in Dusseldorf, Germany on the 6th September 2008. Arabian Journal of Business and Management Review 1(7), 3-12.
  • Aremu M.A. and Adeyemi, S.L. (2011), Small and Medium Scale Enterprises as A Survival strategy for employment generation in Nigeria, Journal of Sustainable Development 4(1), 3-8.
  • Ariyo, D. (2008). Small firms are the backbone of the Nigerian Economy. Africa Economic Analysis, Academy of Management Journal, 1(1), 109-124.
  • Ashamu, S.O. (2014), The Impact of Micro-Finance on Small Scale Business in Nigeria. Journal of Policy and Development Studies, 9(1), 3-12.
  • Ayozie, D. O. and Latinwo, H. K. (2010), Entrepreneurial developments and small scale industry contribution to Nigerian National Development: A Marketing Interface and Information Management and Business Review. 1 (2), 51-68.
  • Azende T. (2011), An empirical evaluation of small and medium enterprises equity Investment scheme in Nigeria, European Journal of Business Economics and Accountancy, 4(4), 2056-2068.
  • CBN, (2011), CBN Bankers’ Committee, Revised operational guidelines for the operation of small and medium enterprises equity investment scheme (SMEEIS).
  • Calice, P., Chando, V. M. & Sekioua, S. (2012). Bank financing to small and medium enterprises in East Africa: Findings of A Survey in Kenya, Tanzania, Uganda and Zambia. Working Paper Series, African Development Bank, Tunis, Tunisia, No 146.
  • Dada R.M. (2014), Commercial banks’ credit and SMEs development in Nigeria, An empirical review, International Journal of Research (IJR), 8 (5), 305-320. Duru, M & Lawal, M.K. (2012) Financial sector reforms and the growth of small and medium enterprises (SMEs) in Nigeria, Universal Journal of Management and Social Sciences. 2 (2), 86- 97.
  • Eriki-Omohezuanun, P., & Inegbenebor, A. (2009), Capacity of SMEs in Nigeria to access institutional equity finance. Research Journal of Business Management, 3 (2), 1-5.
  • Eze, O. R & Okoye, V.(2014). Appraisal of determinants of lending behaviour of deposit money Banks in Nigeria. International Journal of Scholarly, 2(3), 142-155
  • Kwaning, C. O. Nyantakyi, K. & Kyereh, B. (2015), The Challenges behind SMEs’ access to debts financing in the Ghanaian Financial Market. International Journal of Small Business and Entrepreneurship Research, 3(2), 16-30
  • Ladime, J. Sarpong-Kumankoma, E. & Osei, K. A. (2013), Determinants of Bank Lending Behaviour in Ghana. Journal of Economics and Sustainable Development, 4(17), 42-48
  • Nkuah, J. K., Tanyeh, J. P, & Gaeten, K. (2013), Financing small and medium enterprises International Journal of Research in Social Sciences, 2 (3), 12-25 Nwosa, P.I & Oseni,, I.O (2013) The impact of bank loans to SMEs on manufacturing output in (SMEs) in Ghana: Challenges and determinants in accessing bank credit, Nigeria, Journal of social and development sciences. 5 (2), 212-217.
  • Obamuyi, T. M. (2007), An exploratory study of loan delinquency among small and medium enterprises (SMEs) In Ondo State of Nigeria. Labour and Management in Development, 8(3), 1-10 Obasan, K. A. and Adediran, O. A. (2010) The Role of Industrial Sector in the Economic Development of Nigeria, Journal of Management and Society, 1(2), 09-16.
  • Okpara, J. O. & Pamela, N. (2007), Strategic export orientation and internationalization barriers: Evidence from SMEs in a developing economy. Journal of International Business and Cultural Studies, 4, 1-10.
  • Safiriyu, A.M. and Njogo, B.O., (2012), Impact of small and medium scale enterprises in the generation of employment in Lagos State. Arabian Journal of Business and Management Review, 1(11), 107-151.
  • Sawar, H. (2013). Small and Medium Size Enterprises in Economic development: The UNIDO Experience. Industrial Development Officer UNIDO, Vienna ,
  • Gulpinar, N., & Pachamanova, D. (2013). A robust optimization approach to asset-liability management under time-varying investment opportunities. Journal of Banking and Finance, 37, 2081-2041. http://dx.doi.org/10.1016/j.jbankfin.2013.01.025
  • Henroid, M. (2007). Asset Liability Management: Strategic and Regulatory Issues For Asia Pacific Banks. Sungard Bancware.
  • Cucinelli, D. (2013). The relationship between liquidity risk and probability of default: Evidence from the Euro Area, Risk Governance and Control: Financial Markets and Institutions, 3(1), 42–50.
  • Edgar R. Fiedler (1971) Measures of Credit Risk and Experience NBER, ISBN: 0-87014 228-3. http://www.nber.org?books/fied71-1
  • Fan Li and Yijun Zou (2014), The Impact of Credit Risk Management on Profitability of Money deposit banks: A Study of Europe Umea School of Business and Economics Spring Semester, 2014,
  • Ferrouhi, E. M. (2014). Bank Liquidity and Financial Performance: Evidence from Moroccan Banking Industry, Business: Theory and Practice, 15(4), 351–361
  • Gizaw, M., Kebede, M., & Selvaraj, S. (2015), The impact of credit risk on profitability performance of commercial banks in Ethiopia. African Journal of Business Management, 9(2), 59–66

MİKRO, KÜÇÜK VE ORTA İŞLETMELERDE BANKA KREDİSİNİN VE KREDİ ERİŞİLEBİLİRLİĞİNİN BELİRLEYİCİLERİ

Year 2022, Volume: 10 Issue: 3, 299 - 313, 31.12.2022
https://doi.org/10.22139/jobs.1093265

Abstract

Amaç: Çalışmanın amacı Nijerya'daki mikro, küçük ve orta ölçekli işletmelerin performansı ile uygulanan banka kredileri belirleyicilerinin ne ölçüde ilişkili olduğunu tespit etmektir.
Yöntem: Çalışmada veri analizi için ekonometri yöntemi uygulandı. Araştırma için ikincil veriler, erişilebilir, yeterli, doğru ve güvenilir veriler sağlama konusunda uzun bir geçmişe sahip olan Nijerya Merkez Bankası İstatistik Bülteni'nden toplanmıştır. Stata yazılımı ile birlikte çoklu regresyon analizi kullanıldı.
Bulgular: Çalışma, banka büyüklüğünün KOBİ'lere verilen banka kredileri üzerinde önemli bir etkiye sahip olduğunu göstermektedir. Regresyon katsayısı banka büyüklüğünün KOBİ'lere verilen banka kredileri ile negatif ilişkili olduğunu ortaya koymaktadır, bu da banka büyüklüğündeki bir artışın her zaman bankaların kredilerinde bir artışa neden olmayacağı anlamına gelmektedir. Bulgular ayrıca kredi riskinin ve banka likiditesinin bankaların KOBİ'lere kredi vermeleri üzerinde önemli bir etkiye sahip olduğunu göstermektedir. Regresyon sonucu kredi riskinin bankaların KOBİ'lere kredi vermeleriyle negatif ilişkili olduğunu ortaya koymakta, dolayısıyla kredi riskindeki bir artışın kredi vermede azalmaya neden olacağını ima etmektedir. Benzer şekilde likidite oranının KOBİ'lere banka kredisi vermeyle pozitif ilişkili olduğu bulunmuştur. Bu da daha yüksek likidite oranının KOBİ'lere daha yüksek banka kredisi verilmesini teşvik edeceğini göstermektedir. Son olarak, bulgular mevduat hacminin ve faiz oranının bankaların KOBİ'lere verdiği kredilerle önemli bir ilişkisinin olduğunu göstermektedir. Regresyon sonucu ayrıca, faiz oranının KOBİ'lere verilen banka kredileri ile negatif ilişkili olduğunu ortaya koymaktadır, bu nedenle faiz oranındaki bir artışın KOBİ'lere verilen banka kredilerinde bir azalmaya neden olacağını göstermektedir. Benzer şekilde mevduat hacminin banka kredileri ile pozitif ilişkili olduğu bulunmuştur. Bu, mevduat hacmindeki bir artışın, KOBİ'lere verilen banka kredilerinde bir artışa neden olacağı anlamına gelmektedir.
Sonuçlar: Çalışmada banka kredilerinin belirleyicilerinin Nijerya'daki KOBİ'lerin sermayeye erişimi ve gelişimi üzerinde bir etkisi olduğu sonucuna ulaşılmıştır. Çalışma bankaların KOBİ'lere yönelik kredi kısıtlamalarını hafifletecek alternatif bir finansman stratejisi geliştirilmesi gerektiğini öne sürmektedir. Bunun nedeni, KOBİ'lerin bankalar tarafından katı hüküm ve koşullara tabi tutulmaları ve bu nedenle KOBİ’lerin faaliyetlerini finanse etmek ve hayatta kalmalarını sağlamak için yetersiz olabilecek başka finansman kaynakları aramaya sevk etmesidir.

References

  • Afolabi, A. A. & Oni, E. O. (2016), Effect of micro-finance banks on micro, small and medium scale enterprises (MSMEs) in Nigeria. Management Review Journal, 6(12), 7-19
  • Afolabi M.O (2013) Growth effect of small and medium enterprises (SMEs) financing in Nigeria, Journal of Africa Macro-Economic Review. 3 (1), 193-205.
  • Akingunola, R. O. (2011). Small and Medium Scale Enterprises and Economic Growth in Nigeria: An Assessment of Financing Options, Pakistan Journal of Business and EconomicReview, 2(1, 78-97.
  • Agyapong, D. Agyapong, G. K.Q. & Darfor, K. N. (2011), Criteria for assessing small and medium enterprises borrowers in Ghana. International Business Research, 4 (4), 132-138
  • Alhassan, F. & Sakara, A. (2014). Socio-economic determinants of small and medium enterprises (SMEs) Access to credit from the Barclays Bank in Tamale-Ghana, International Journal of Humanities & Social Science Studies, I (2), 26-36
  • Ana, I. (2008), Nigerians and micro financing. A paper presented at the 5th Nigeria- German Business Group Conference in Dusseldorf, Germany on the 6th September 2008. Arabian Journal of Business and Management Review 1(7), 3-12.
  • Aremu M.A. and Adeyemi, S.L. (2011), Small and Medium Scale Enterprises as A Survival strategy for employment generation in Nigeria, Journal of Sustainable Development 4(1), 3-8.
  • Ariyo, D. (2008). Small firms are the backbone of the Nigerian Economy. Africa Economic Analysis, Academy of Management Journal, 1(1), 109-124.
  • Ashamu, S.O. (2014), The Impact of Micro-Finance on Small Scale Business in Nigeria. Journal of Policy and Development Studies, 9(1), 3-12.
  • Ayozie, D. O. and Latinwo, H. K. (2010), Entrepreneurial developments and small scale industry contribution to Nigerian National Development: A Marketing Interface and Information Management and Business Review. 1 (2), 51-68.
  • Azende T. (2011), An empirical evaluation of small and medium enterprises equity Investment scheme in Nigeria, European Journal of Business Economics and Accountancy, 4(4), 2056-2068.
  • CBN, (2011), CBN Bankers’ Committee, Revised operational guidelines for the operation of small and medium enterprises equity investment scheme (SMEEIS).
  • Calice, P., Chando, V. M. & Sekioua, S. (2012). Bank financing to small and medium enterprises in East Africa: Findings of A Survey in Kenya, Tanzania, Uganda and Zambia. Working Paper Series, African Development Bank, Tunis, Tunisia, No 146.
  • Dada R.M. (2014), Commercial banks’ credit and SMEs development in Nigeria, An empirical review, International Journal of Research (IJR), 8 (5), 305-320. Duru, M & Lawal, M.K. (2012) Financial sector reforms and the growth of small and medium enterprises (SMEs) in Nigeria, Universal Journal of Management and Social Sciences. 2 (2), 86- 97.
  • Eriki-Omohezuanun, P., & Inegbenebor, A. (2009), Capacity of SMEs in Nigeria to access institutional equity finance. Research Journal of Business Management, 3 (2), 1-5.
  • Eze, O. R & Okoye, V.(2014). Appraisal of determinants of lending behaviour of deposit money Banks in Nigeria. International Journal of Scholarly, 2(3), 142-155
  • Kwaning, C. O. Nyantakyi, K. & Kyereh, B. (2015), The Challenges behind SMEs’ access to debts financing in the Ghanaian Financial Market. International Journal of Small Business and Entrepreneurship Research, 3(2), 16-30
  • Ladime, J. Sarpong-Kumankoma, E. & Osei, K. A. (2013), Determinants of Bank Lending Behaviour in Ghana. Journal of Economics and Sustainable Development, 4(17), 42-48
  • Nkuah, J. K., Tanyeh, J. P, & Gaeten, K. (2013), Financing small and medium enterprises International Journal of Research in Social Sciences, 2 (3), 12-25 Nwosa, P.I & Oseni,, I.O (2013) The impact of bank loans to SMEs on manufacturing output in (SMEs) in Ghana: Challenges and determinants in accessing bank credit, Nigeria, Journal of social and development sciences. 5 (2), 212-217.
  • Obamuyi, T. M. (2007), An exploratory study of loan delinquency among small and medium enterprises (SMEs) In Ondo State of Nigeria. Labour and Management in Development, 8(3), 1-10 Obasan, K. A. and Adediran, O. A. (2010) The Role of Industrial Sector in the Economic Development of Nigeria, Journal of Management and Society, 1(2), 09-16.
  • Okpara, J. O. & Pamela, N. (2007), Strategic export orientation and internationalization barriers: Evidence from SMEs in a developing economy. Journal of International Business and Cultural Studies, 4, 1-10.
  • Safiriyu, A.M. and Njogo, B.O., (2012), Impact of small and medium scale enterprises in the generation of employment in Lagos State. Arabian Journal of Business and Management Review, 1(11), 107-151.
  • Sawar, H. (2013). Small and Medium Size Enterprises in Economic development: The UNIDO Experience. Industrial Development Officer UNIDO, Vienna ,
  • Gulpinar, N., & Pachamanova, D. (2013). A robust optimization approach to asset-liability management under time-varying investment opportunities. Journal of Banking and Finance, 37, 2081-2041. http://dx.doi.org/10.1016/j.jbankfin.2013.01.025
  • Henroid, M. (2007). Asset Liability Management: Strategic and Regulatory Issues For Asia Pacific Banks. Sungard Bancware.
  • Cucinelli, D. (2013). The relationship between liquidity risk and probability of default: Evidence from the Euro Area, Risk Governance and Control: Financial Markets and Institutions, 3(1), 42–50.
  • Edgar R. Fiedler (1971) Measures of Credit Risk and Experience NBER, ISBN: 0-87014 228-3. http://www.nber.org?books/fied71-1
  • Fan Li and Yijun Zou (2014), The Impact of Credit Risk Management on Profitability of Money deposit banks: A Study of Europe Umea School of Business and Economics Spring Semester, 2014,
  • Ferrouhi, E. M. (2014). Bank Liquidity and Financial Performance: Evidence from Moroccan Banking Industry, Business: Theory and Practice, 15(4), 351–361
  • Gizaw, M., Kebede, M., & Selvaraj, S. (2015), The impact of credit risk on profitability performance of commercial banks in Ethiopia. African Journal of Business Management, 9(2), 59–66
There are 30 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Original Articles
Authors

Adeshola Olunuga 0000-0001-7390-3938

Publication Date December 31, 2022
Submission Date March 25, 2022
Acceptance Date December 9, 2022
Published in Issue Year 2022 Volume: 10 Issue: 3

Cite

APA Olunuga, A. (2022). DETERMINANTS OF BANK LENDING AND CREDIT ACCESSIBILITY OF MICRO, SMALL AND MEDIUM ENTERPRISES. İşletme Bilimi Dergisi, 10(3), 299-313. https://doi.org/10.22139/jobs.1093265