DEPOSIT MONEY BANK AND SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

ABSTRACT

The study empirically investigates the relationship between deposit money banks and small and medium scale enterprises in Nigeria. The study employed the correlation coefficient and the ordinary least square (OLS) econometric technique on annual data covering a period of 24 years (1992 to 2018). Six variables were used in the empirical model which includes bank assets, bank deposit, commercial banks loans to SMEs, commercial bank credit to private sector and RGDP. The results from the empirical analysis reveal that only RGDP has significant impact on the SMEs sub-sector, while the other hypothesized variables failed the 5 percent significance levels. The study recommends that relevant policy makers in the country should as a policy reform tool mandate the banking sector not to only set aside good percentage of their annual profit before interest and taxes specifically to finance the SMEs but should also lower the collaterals for assessing such loans at a very lower rate. By so doing banks’ loans to SMEs sub-sector will actually yields its desired purpose.