ABSTRACT
A number of research project works has been carried out on the concept of financial deepening and the growth of micro, small, and medium scale enterprises independently, but no work has been done on their union until now.
Thisstudyempiricallyinvestigatestheimpactoffinancial deepening onthegrowth of micro, small, and medium scale enterprises (MSMEs) in Nigeria over the period 1986-2020. Regressing MSMEsgrowthrateonthreeexplanatoryvariables domestic credits to MSMEs,gross domestic product, and money supply. employing the OLS econometric estimation techniques, the findings show that financial deepening have a positive and significant effect on the growth of MSMEs in Nigeria. Specifically, domestic credits are positively and significantly related to the growth rate of MSMEs in Nigeria. The gross domestic product is positively related to growth of MSMES. We further find evidence that money supply is positively and significantly related to growth rate of MSMEs.
Against the backdrop of the foregoing findings, we recommend Increased credit channelling from the banking sector to MSMEs, monetary authorities should mandate banks to devote a sizeable portion of their credit portfolio to financing MSMEs, good macroeconomic policies relating to reduced lending rates and other policies to stimulate the growth of MSMEs should be put in place in order to facilitate the growth of MSMEs in Nigeria.
