Bank Credit Facilities and SMEs’ Performance in Nigeria

  • James Ese Ighoroje
  • Akpokerere Othuke Emmanuel
Keywords: Bank Credit Facilities, SMEs’ Performance, Nigeria


This paper examined the contributions of bank credit facilities on small and medium scale enterprises (SMEs’) performance in Nigeria from 2004 to 2020. The regressor is bank credit facilities measured by bank loans (BOL), bank advances (BOA), and bank overdrafts (BOV) while the regress and is SMEs’ performance measured by the contribution of SMEs to GDP. The study controlled for both cost of credits (COC) and deposit rates (DER). The study sourced data from the Central Bank of Nigerian Statistical Bulletin and the World Bank Data Base, 2020. The study used the Robust Regression estimate to test the research hypotheses. The study evidenced that the model has a high predictor power. Again, bank credit facilities vis-à-vis BOL, BOA, and BOV alongside COC and DER exerted high effects on SMP throughout the studied periods. On individual basis, BOL, BOA, and COC are highly significant while COC is insignificant statistically. In terms of direction, BOL, BOA, and DER have direct effects on SMP while COC have indirect effects on SMP. Consequently, the paper concludes that, bank credit extension vis-à-vis BOL and BOA contributes immensely to the performance of SMEs provided that the COC is reduced and that DER is increased. Hence, the study advocates that bank regulators must ensure that all protocols in obtaining BOA should be minimized so as to ensure that BOA increase SMP. Lastly, the Nigerian government should create an enabling environment for SMEs with a view to further deepen the popularity of bank advances.