IDEAS home Printed from https://ideas.repec.org/p/wpa/wuwpma/0411002.html
   My bibliography  Save this paper

Credit Availability to Small and Medium Scale Enterprises in

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • Ogujiuba Kanayo & Ohuche Friday & Adenuga Adeniyi, 2004. "Credit Availability to Small and Medium Scale Enterprises in," Macroeconomics 0411002, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0411002 Note: Type of Document - doc; pages: 25. We would Appreciate Comments
    as

    Download full text from publisher

    File URL: http://econwpa.repec.org/eps/mac/papers/0411/0411002.pdf
    Download Restriction: no

    File URL: http://econwpa.repec.org/eps/mac/papers/0411/0411002.ps.gz
    Download Restriction: no

    File URL: http://econwpa.repec.org/eps/mac/papers/0411/0411002.doc.gz
    Download Restriction: no

    References listed on IDEAS

    as
    1. Berger, Allen N. & Klapper, Leora F. & Udell, Gregory F., 2001. "The ability of banks to lend to informationally opaque small businesses," Journal of Banking & Finance, Elsevier, vol. 25(12), pages 2127-2167, December.
    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.
    4. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:rss:jnljef:v2i3p3 is not listed on IDEAS
    2. repec:rss:jnljms:v1i5p4 is not listed on IDEAS
    3. repec:rss:jnljef:v3i2p6 is not listed on IDEAS
    4. repec:rss:jnljms:v4i7p3 is not listed on IDEAS

    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G2 - Financial Economics - - Financial Institutions and Services
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. 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). General contact details of provider: http://econwpa.repec.org .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.