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Effects of Microfinance on Micro and Small Enterprises (MSEs) Growth in Nigeria


  • Abiola Babajide Ph.D

    (Department of Banking and Finance, Covenant University, Ota P.M.B 1023, Ota, Ogun State, Nigeria)


This paper investigates the effects of microfinance on micro and small business growth in Nigeria. The objectives are: one, to examine the effects of different loan administration practices (in terms of loan size and tenor) on small business growth criteria. Second, to examine the ability of Microfinance-Banks (MFBs) (given its loan-size and rates of interest charged) towards transforming micro-businesses to formal small scale enterprises. The paper employed panel data and multiple regression analysis to analyze a survey of 502 randomly selected enterprises finance by microfinance banks in Nigeria. We find strong evidence that access to microfinance does not enhance growth of micro and small enterprises in Nigeria. However, other firm level characteristics such as business size and business location, are found to have positive effect on enterprise growth. The paper recommends a recapitalization of the Microfinance banks to enhance their capacity to support small business growth and expansion.

Suggested Citation

  • Abiola Babajide Ph.D, 2012. "Effects of Microfinance on Micro and Small Enterprises (MSEs) Growth in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(3), pages 463-477, July.
  • Handle: RePEc:asi:aeafrj:2012:p:463-477

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    References listed on IDEAS

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    Cited by:

    1. repec:kqi:journl:2017-1-2 is not listed on IDEAS
    2. repec:eee:quaeco:v:64:y:2017:i:c:p:44-56 is not listed on IDEAS
    3. Ayi Gavriel Ayayi, 2012. "Microfinance: A Time to Deliberate," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(3), pages 445-447, July.
    4. George Kwadwo Anane & Patrick Brandful Cobbinah & Job Kwame Manu, 2013. "Sustainability of Small and Medium Scale Enterprises in Rural Ghana: The Role of Microfinance Institutions," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(8), pages 1003-1017, August.


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