IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Credit Availability to Small and Medium Scale Enterprises in

Listed author(s):
  • Ogujiuba Kanayo

    (African Institute for Applied Economics, 128 Park Ave G.R.A; Enugu, Enugu State-Nigeria)

  • Ohuche Friday

    (Econs Dept; Ebonyi State University Abakaliki, Ebonyi State-Nigeria)

  • Adenuga Adeniyi

    (Central Bank of Nigeria)

The critical causes of the risk-averse behaviour of banks in funding Small and Medium Enterprises ( SMEs) in Nigeria, monetary policy and financial stability implications of SMEs “Credit Crunch” were evaluated. This was done along the lines of inadequate capital base of the institutions in the sector vis-à-vis the effectiveness of Bankers Committees’ Small and Medium Scale Industries Equity Investment Scheme (SMIEIS) Initiative. The work adopted a conceptual analytical framework that employs theoretical and statistical comparative cross-sectional data to analyze the SMIEIS Programme of Nigeria vis-à-vis capital base of banks in ascertaining whether it offers an effective means of solving the problem of funding small and medium scale businesses in Nigeria and its attendant implication for financial stability in the system. The analysis confirms that Government needs to urgently address the problem of financial intermediaries cum stability in the system as a national priority and build institutions that will drive the reform process. This incidentally is the major thrust of the Government’s new economic blueprint. Banks could play more active role in actualizing the objectives of SMIEIS by re-capitalizing and setting up separate desks to manage the fund and vigorously conversing the idea such as any other bank product. Mega banks alone could provide the much needed funding for SMEs. This will mitigate the problem of weak asset-based and heavy collaterals. The macroeconomic environment should be stabilized through proper fiscal and monetary policy coordination to reduce interest rates, stabilize prices and reduce rent seeking behaviour among economic agents. This paper shows that capital matters for the response of bank lending to economic shocks and highlights the need for a sound, stable and efficient financial sector to assist SME’s. This goes in tandem with a stabilization of the macroeconomic environment. Notwithstanding, it is difficult to draw what are the implications of this result with respect to the new directions of the capitalization to be implemented in 2005.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

File URL:
Download Restriction: no

File URL:
Download Restriction: no

Paper provided by EconWPA in its series Macroeconomics with number 0411002.

in new window

Length: 25 pages
Date of creation: 02 Nov 2004
Handle: RePEc:wpa:wuwpma:0411002
Note: Type of Document - doc; pages: 25. We would Appreciate Comments
Contact details of provider: Web page:

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Cole, Rebel A., 1998. "The importance of relationships to the availability of credit," Journal of Banking & Finance, Elsevier, vol. 22(6-8), pages 959-977, August.
  2. Berger, Allen N & Frame, W Scott & Miller, Nathan H, 2005. "Credit Scoring and the Availability, Price, and Risk of Small Business Credit," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 191-222, April.
  3. Allen N. Berger & Gregory F. Udell, 2002. "Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure," Economic Journal, Royal Economic Society, vol. 112(477), pages 32-53, February.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpma:0411002. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.