Accessibility of Credit Facility From Financial Institutions by Small and Medium Scale Enterprises: Evidence From Nigeria
Chapter One
Objective of the study
The objectives of the study are;
- To determine the current level of accessibility of credit facility by SMEs from financial institutions in Nigeria.
- To identify the challenges faced by SMEs in accessing credit facility from financial institutions in Nigeria.
- To examine the relationship between the availability of credit facility and the growth of SMEs in Nigeria.
- To investigate the impact of government policies and regulations on the accessibility of credit facility for SMEs in Nigeria.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
INTRODUCTION
The capacity of borrowers to get money from fund sources is regarded as credit (Moulick, 2020). Depositors, finders, and other sources of cash are used by financial institutions to provide funds to borrowers (Sanni, Oke & Alayande, 2020). Financial firms serve as intermediaries among borrowers as well as depositors or fund investors in this fashion. In South Africa, where the capital market is underdeveloped, In South Africa, where the capital market is underdeveloped, credit restrictions manifest themselves in a number of ways, forcing SMEs to depend on self-financing or lending from friends and family in a number of ways, compelling SMEs to rely on self-financing or borrowing from family and friends (Balogun, Agumba & Ansary, 2018). Small businesses are forced to depend on high-cost short-term financing due to a lack of access to lengthy credit (Balogun, 2017). The muchmore formalized financial institutions, which tend to classify all SMEs as uncreditworthy, are to blame for these problems (Moulick, 2020). The development of less formal institutions, on the other hand, has not alleviated this load. Due to a lack of finances, these microcredit organizations can only go so far. Because of their short-term financing, they are unable to quickly convert their savings into collateral for medium- or long-term loans (Balogun, Agumba & Ansary, 2018). They also face the cost of refinancing through the official banking system, as well as the lack of access to central bank refinancing (Moulick, 2020). Longer relationships with a banking institutions or other financing institutions could indicate a company seems to have a “formal” capital market connection, where some believe is essential for obtaining credit market access (Eyiah, Kheni & Acquah, 2018). The credit history of a company is a key factor in determining whether or not it may receive credit. Because the finances of the owner and the company are often mixed and undifferentiated in certain small companies, the owner’s credit history may be equally as significant as the enterprise’s credit history (Balogun, 2017). In emerging, developing nations, in which banking institutions have made considerable advances, SMEs may nevertheless encounter difficulties in obtaining formal financing such as financial loans, assurances, project funding, rental, and other forms of financing (Balogun, Agumba & Ansary, 2018). Despite the fact that SMEs are the biggest group of commercial bank clients in every country, loans to SMEs are often restricted to relatively short terms, preventing the financing of significant projects. Furthermore, because of the greater perceived risks associated with SME loans, accessibility to reasonable interest rates may be restricted (Sanni, Oke & Alayande, 2020).
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine accessibility of credit facility from financial institutions by small and medium scale enterprises: evidence from Nigeria. First bank, Akwa Ibom state form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain accessibility of credit facility from financial institutions by small and medium scale enterprises: evidence from Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing accessibility of credit facility from financial institutions by small and medium scale enterprises: evidence from Nigeria
Summary
This study was on accessibility of credit facility from financial institutions by small and medium scale enterprises: evidence from Nigeria. Three objectives were raised which included: To determine the current level of accessibility of credit facility by SMEs from financial institutions in Nigeria, to identify the challenges faced by SMEs in accessing credit facility from financial institutions in Nigeria, to examine the relationship between the availability of credit facility and the growth of SMEs in Nigeria and to investigate the impact of government policies and regulations on the accessibility of credit facility for SMEs in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from first bank, Akwa Ibom state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
This study concluded that the access to credit facilities is useful in determining the tax compliance among Small and Medium Enterprises (SMEs) in Nigeria. On the overall, the result of ordered logistic regression suggest that access to credit facilities has significant effect on the level of tax compliance among small and medium scale enterprises in Nigeria.
Recommendation
As a result, banks and government authorities should increase their financial assistance for the small and medium scale enterprises, which is a key economic force in the country. Governments may help SMEs with financial, operational, business, and marketing assistance through a variety of regulatory methods. These may include the supply of collateral when establishing and supporting various credit programs for SMEs. These credit plans might also include procedures that incentivize SMEs to hire more people, gain financial independence, and pay less in taxes to the government or local governments. Governments should support SME employee training in order to lessen the financial burden on SMEs and boost efficiency or production
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