FINANCING SMALL AND MEDIUM SCALE ENTERPRISE BY DEPOSIT MONEY BANKS

ABSTRACT

Nigeria is a country flowing with rich human and natural resources. Yet, like a twist of fortune, a good number of our citizens are living below the agreeable WHO human standard (i.e. in sub-human condition) and in abject poverty. The deposit money banks whose duty it is to assist financially the small and medium scale enterprises (SMEs) that serves as pivotal instrument for reducing abject poverty and enhancing economic growth in Nigeriacould just be characterized as generally unable to meet the needs of these medium and small scale enterprises. Many research work have been carried out on the role of deposit money banks in Nigeriaespecially in the area of meeting the borrowing needs of SMEs. This paper does not attempt to discuss the causes or effects of the inability of these instituting to meet the above mentioned needs. Its main objective is to analyzing the role and effectiveness of these institutions with regard to providing resources to meet the borrowing needs of medium and small scale enterprises. To attain this, data were collected from the statistical bulletin of Central Bank of Nigeria from 1981-2013. The paper employed the descriptive method. The Findings shows that an increase in commercial banks credit to small and medium scale enterprises in Nigeria stimulates the activities of small and medium scale enterprises in Nigeria.  Findings from the estimation shows that deposit money banks in Nigeria have been lacking in this aspect. As a result, recommendations were made for its stability and sustainability such that the monetary authority should  initiate policies that would redirect their credits to meet the borrowing needs of at least  65% of the medium and small scale enterprises in the economy. This will help to boost economic activities within the country because lack of capital retards investment.