RELATIONSHIP BETWEEN MICROFINANCE CREDITS AND GROWTH IN SME’S IN NIGERIA

Abstract

The study investigates the relationship between microfinance credit and small and medium business growth in Nigeria, for the period 2006-2014. Secondary data of panel data form were used for the study. The data covers information on business growth of Seventeen firms over a period of eight years. The data were sourced from annual reports of the firms and the data base of Central Bank of Nigeria. For the analysis, both fixed effect and random effect were tested but the Hausman show that random effect is fit; hence, the analysis was based on random effect model. The results from panel data analysis show that bank credit has no relationship with business growth in Nigeria. The result suggests that credit provision from banks have no apparent effect on growth of businesses. In addition, sales of the firms and the loans obtained by the firms are statistically significant suggesting that assets of businesses would grow with increase in sales over time. Also, loan, a source of business finance, if assessed on regular basis, subject to the need of the business, would lead to increase in asset drive of businesses