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Rivers State University, Port Harcourt.
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| Title: | Role of Small and Medium Entreprises (SMEs) Financing in Boosting Economic Growth in Nigeria |
| Author(s): | EZEKWE Promise |
| Abstract: | This study examined the impact of SMEs financing on the growth of the Nigerian economy from 1990 to 2020. Thus, the specific objectives were to investigate the impact of credit to Small and Medium Enterprises (SMEs), interest rate and exchange rate on economic growth. The time series data for the empirical investigation were obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin and World Development Indicators (WDI). The data analysis techniques include descriptive statistics, unit root and cointegration tests as well as vector error correction mechanism (VECM). The unit root test results showed that all the variables are stationary at first difference, which necessitated the acceptance of the null hypothesis of unit root. Evidence of long run relationship was established among the variables from the Johansen cointegration test results. The long term results showed that the impacts of credits to SMEs on real GDP are positive and significant at 5 percent level. A percentage increase in credit to SMEs contributed leads to 1.64 per cent increase in real GDP. This implies that SMEs financing contributes positively to economic growth. The results further showed that interest rate impacted negatively on economic growth.. Thus, 1 per cent increase in interest rate leads to 1.156 per cent decrease in real GDP. In addition, the long term impact of exchange rate on real GDP is positive and significant at 5 per cent level. Based on the findings, this recommends among others that the CBN should prioritize adequate access to credits for SMEs to enhance their contributions to economic growth. |
| Keywords: | SMEs financing, economic growth, interest rate, exchange rate and real GDP |
| Journal: | Journal of Contemporary Research in Economics and Development Studies (JCREDS) |
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