THE ROLE OF DEPOSIT MONEY BANKS IN THE DEVELOPMENT OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

ABSTRACT

The study examines the relationship between deposit money banks and small and medium scale enterprises in the Nigeria. The rationale for the study was based on the realization that deposit money banks play vital role in the development of the small and medium scale enterprise in any economy through timely provision of credit facilities to enhancing the sub-sector. The study employed the correlation coefficient and the ordinary least square (OLS) econometric technique on annual data covering a period of 24 years (1998 to 2021). The results from the empirical analysis indicate generally that bank loans to small and medium scale enterprises and banks total credits to private sector do not have any significant impact on SMEs in Nigeria, but it is banks assets that actually have significant impact on the growth and performance of SMEs in Nigeria in the period of investigation. The study recommends that 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.