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Bank growth, competition, and small business financing in Nigeria

Author

Listed:
  • Cosmas Ikechukwu Asogwa
  • Nonye Azih
  • Godwin Keres Okoro Okereke
  • Hyginus Osita Omeje
  • Christiana Ukamaka Nwachukwu
  • Joseph Ndozianyichukwu Chukwuma
  • Honesta Chidiebere Anorue
  • Favour Amarachi Moghalu
  • Godwin Emeka Eze
  • Anthonia Uju Uzuagu

Abstract

This study used ex post-facto design to examine how competition among high-growth banks has affected the banks' provision of assets to small business borrowers in Nigeria following several regulations. The study used a bi-sample structure through a judgmental technique that examined 126 and 96 firm-years between 2001 and 2017, which enabled us to test both pre- and post-bank growth-competition Boone model effects. We found evidence that in both the pre- and post-bank-growth eras, competition significantly increased small business loans consistent with 'competition-stability' hypothesis. A unit increase in the Boone-competition indicator resulted in a 3.8% credit supply. However, when we used concentration ratio (CR6), we found that pre-mega structure competition yields negative effects but that the post-growth effect on credit supply remains positive. Controlled macroeconomic factors yield a very significant effect on credit supply. Thus, policymakers should not ignore the variables in competition-monetary transmission policies in Nigeria.

Suggested Citation

  • Cosmas Ikechukwu Asogwa & Nonye Azih & Godwin Keres Okoro Okereke & Hyginus Osita Omeje & Christiana Ukamaka Nwachukwu & Joseph Ndozianyichukwu Chukwuma & Honesta Chidiebere Anorue & Favour Amarachi M, 2022. "Bank growth, competition, and small business financing in Nigeria," Afro-Asian Journal of Finance and Accounting, Inderscience Enterprises Ltd, vol. 12(4), pages 526-550.
    • Handle: RePEc:ids:afasfa:v:12:y:2022:i:4:p:526-550
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