, M.Sc., Department of Banking and Finance, Faculty of Management and Social Sciences, Adekunle Ajasin University, P.M.B 001, Akungba Akoko, Ondo State, Nigeria
, Department of Banking and Finance, Faculty of Management Science, Kogi State University, Anyigba Kogi State, Nigeria
, FCIB, PhD, Department of Banking and Finance, Faculty of Management Science, Kogi State University, Nigeria
Developing a sustainable source of finance for MSMEs has remained a perennial problem as a result of their poor accounting systems and lack of, or low-valued collaterals. This study examined the impact of development bank finance on the growth and development of MSMEs in Nigeria from 2010 – 2017 with specific objectives of determining whether MSMEs have poor accounting systems, the extent to which SMEs financing depend on sound accounting practices and whether MSMEs funding depend on collateral using the survey research design method. Ordinary Least Square Regression (OLS) Technique was used to analyse the data obtained from primary and secondary sources. The study found that MSMEs in Nigeria have a poor accounting practice, access to finances by MSMEs depend largely on a sound accounting practice and that the volume and value of credits to MSMEs depend on the availability of collaterals. The study recommends that SMEs should install a sound internal control system MSMEs should ensure a sound accounting practice that conforms with the internationally accepted accounting standards in order to boost their access to funding, and MSMEs should invest a portion of their capital in non-current assets in order to increase the value of their collaterals and, hence, have expansive access to funding.
Keywords: Sound Accounting Practices, Collateral, Non-Current Assets, and funding.
JEL Classification: G2, G21.
Cite as: Adeyinka, Ad. J., Abdulkarim, M., Odi, N. (2019). Implications of Development Bank Finance on the Growth and Development of Msmes in Nigeria (2010-2017). Financial Markets, Institutions and Risks, 3(3), 28-48. http://doi.org/10.21272/fmir.3(3).28-48.2019.
- Jibir, (2015). Microfinance institutions and the development of SMEs in Gombe State of Nigeria. International Journal of Banking, Finance, Management and Development Studies, 1(5), 72-88.
- Aldrich, J. H. and F. Nelson (1984). Linear Probability, Logit and Probit Models, Chicago: Sage publications.
- Amemiya, T. (1981). Qualitative Response Regression Models, Journal of Economic Literature, 19, 331-354.
- Aremu, M.A., Adeyemi, S. L. (2011). Small and Medium Scale Enterprises as survival strategy for Employment Generation in Nigeria, Journal of sustainable Development, 4(1). Retrieved November 2 from www.ccsenet.org/jsd
- Aremu, M. A. (2010). Small and Medium Scale Enterprises Capacity Building in Nigeria, A paper presented at the International Conference on management and Enterprise Development on Intellectual and New Strategies for Sustainability Development of the Third World, Held at Conference Centre, University of Ibadan, Nigeria Oct.5th – 8th.
- D. Motilewa, M. Ogbari, & D. O. Aka, (2015). A review of the impacts SMEs as social agents of economic liberations in developing economies. International Review of Management and Business Research, 4(3), 903-914.
- Beck, T., A. Demirguc-Kunt, L. Laeven, R. Levine. (2008). Finance, firm size and growth. Journal of Money, Credit, and Banking, 40(7), 1379-1405.
- Beck. T. Demirguc-Kunt. A. &Maksimovic. V. (2005). Financial and legal constraints to firm growth: does firm size matter? Journal of Finance. 60, 137-177.
- Bekele, E. Zeleke, W. (2008). Factors that affect the long-term survival of micro, small and medium enterprises in Ethiopia. South African Journal of Economics, 76(3),1-33.
- Berger A.N. and Black L.K. (2011). Bank size, lending technologies, and small business finance, Journal of Banking & Finance, 35, 724-735
- Berger A.N. and Udell G.F. (1998). The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle, Journal of Banking and Finance, 22.
- Berger A.N. and Udell G.F. (2002). Small business credit availability and relationship lending: The importance of bank organizational structure, Economic Journal, 112, F32-F35.
- Berger A.N. and Udell G.F. (2006). A more complete conceptual framework for SME finance, Journal of Banking & Finance 30, 2945-2966.
- Central Bank of Nigeria. (2016). Statistical Bulletin. Abuja, Nigeria.
- E. T. Chinweuba, & C. O. Sunday. (2015). Quantitative analysis of the impact of small and medium scale enterprises on the growth of Nigerian economy: (1993-2011). International Journal of Development and Emerging Economics, 3(1), 26-38.
- Gujarati, D. N., Porter D.C. (2009). Basic Econometrics, New York: McGrawHill, fifth Edition.
- I. B. Kadiri. (2012). Small and medium scale enterprises and employment generation in Nigeria: the role of finance. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(9), 79-94.
- K. Odubajo. (2001). Relevance of small-scale enterprises in development of Nigerian. Economy Journal of Banking, 8(6), 14-19.
- L. Anthony & S. Arthur, (2008). The role of micro, small and medium enterprises in economic growth: across-country regression analysis, United States Agency for International Development Micro-Report, 135.
- Larry, M. B. (1997). Econometrics and Presidential Elections, Journal of Economic Perspectives, 11(3), 195-196.
- M. A. Carree., Vanstel. A. J. Thurik. A. R. & A. R. M. Wennekers. (2002). Economic development and business ownership: an analysis using data of 23 OECD countries in the period 1976-1996, Small Business Economic, 19, 217-290.
- M. A. Taiwo, A. M. Ayodeji, & B. A. Yusuf, (2012). Impact of SMEs on Economic Growth and Development. American Journal of Business and Management, 1(1), 18-22.
- M. O. Afolabi. (2013). Growth effect on small and medium enterprises (SMEs) financing in Nigeria, Journal of African Macroeconomic Review, 3(1), 193-205.
- Ministry of Commerce and Industry (2009) Field surveyMoghadden, G. and E. Hallie (2009). Predicting the Incumbent party vote shares in U.S Presidential Elections, Cato Journal, 29,455-468.
- Nagaya N., (2017). SME impact on output growth, case study of India. Palma Journal, 16(13), 11-170.
- Obamuyi, T. M. (2007). An Exploratory Study of Loan Delinquency among Small and Medium Enterprise (SMEs) in Ondo State of Nigeria, Labour and Management Development Journal, 8, 1- 10
- OECD (2006). The SME Financing Gap. Theory and Evidence, Volume I, OECD, OECD Publishing.
- OECD (2009). Financing high growth and innovative start-ups and SMEs: data and measurement issues, OECD. Paris, COM/STD/CFE/SME(2008)2/FINAL.
- OECD (2010a), High Growth Enterprises. What Governments can do to make a difference? OECD Publishing. OECD (2010b). Assessment of government support programmes for SMEs’ and entrepreneurs’ access to finance in the global crisis, OECD, Paris.
- OECD (2010c). SMEs, Entrepreneurship and Innovation, OECD Publishing
- OECD (2010d). The OECD Innovation Strategy. Getting a head start on tomorrow, OECD Publishing
- OECD (2011a). Financing High Growth Firms: The Role of Angel Investors, OECD Publishing. OECD (2011b), Entrepreneurship at a Glance 2011, OECD Publishing.
- OECD (2011c). Business Innovation Policies. Selected country comparisons, OECD Publishing OECD (2012a), Financing SMEs and Entrepreneurs 2012: An OECD Scoreboard, OECD Publishing.
- OECD (2012b). Entrepreneurship at a Glance 2012, OECD Publishing.
- OECD (2013a). SME financing: Roadmap for future work – Addendum. Selected issues and overview of past and current work on SME finance at the OECD, OECD, Paris, DAF/CMF (2013)3/ADD1
- OECD (2013b). Alternative Financing Instruments for SMEs and entrepreneurs: The case of Mezzanine Finance, OECD. Paris, CFE/SME (2012)9/FINAL.
- OECD (2013c). Credit Mediation for SMEs and Entrepreneurs, OECD, Paris, CFE/SME (2011)8/FINAL.
- OECD (2013d). The Role of Credit Guarantee Schemes and Mutual Guarantee Societies in supporting finance for small and medium-sized enterprises, OECD, Paris, CFE/SME (2012)1/FINAL.
- OECD (2013e). Policies for seed and early stage finance: Summary of the 2012 OECD Financing Questionnaire, OECD, Paris, DSTI/IND (2013)5.
- OECD (2013f). The role of banks, equity markets and institutional investors in long-term financing for growth and development. Report for G20 Leaders, Report presented at the Meeting of the G20 Finance Ministers and Central Banks Governors in Moscow, 15-16 February 2013.
- OECD (2014a). SME debt financing beyond bank lending: the role of securitisation, bonds and private placements, OECD, Paris.
- OECD (2014b), Italy: Key Issues and Policies, OECD Studies on SMEs and Entrepreneurship, OECD Publishing.
- OECD (2014c), New approaches to SME and entrepreneurship finance: the case of crowdfunding, OECD, Paris, CFE/SME (2013)/7/REV2/ANN1.
- OECD (2014d), Entrepreneurship at a Glance 2014, OECD Publishing.
- OECD (2014e), New Approaches to Economic Challenges. Synthesis Report, Meeting of the OECD Council at Ministerial Level, Paris, 6-7 May.
- OECD (2014f), Public SME Equity Financing – Exchanges, Platforms, Players, OECD Financial Roundtable meeting, 23 October 2014, OECD, Paris, DAF/CMF (2014)1.
- Ogujiuba, K. K., F. K. Ohuche and A. O. Adenuga (2004). Credit Availability to small and medium scale enterprises in Nigeria: Importance of new capital base for banks- background and issues”, AIAE working paper.
- Olorunshola, J. A. (2003). Problems and Prospects of Small and Medium Scale Industries in Nigeria, Seminar on Small and Medium Scale Industries Equity Investments Equity Scheme, Publication No. 4, CBN Training Centre, Lagos.
- Olorunshola, J. A. (2003). Problems and Prospects of Small and Medium Scale Industries in Nigeria, Seminar on Small and Medium Scale Industries Equity Investments Equity Scheme, Publication, 4, CBN Training Centre, Lagos.
- R. Nalini, R. Alamelu, R. Amudha, L.C.S. Motha. (2016). Financial literacy and its contributing factors in investment decisions among urban populace. Indian Journal of Science and Technology. 9(27), 1-9.
- R. Thurik, & S. Wennekers. (2004). Entrepreneurship, small businesses and economic growth. Journal Small Business and Entrepreneurship Development, 1(1), 140-149
- R. Thurik, & S. Wennekers. (2004). Entrepreneurship, small businesses and economic growth. Journal Small Business and Entrepreneurship Development, 1(1), 140-149.
- S. Vijayakumar. (2013). The trend and impact of SMEs on economic growth of Sri Lanka. Journal of Global Business Management and Research, 2(1), 39-47.
- T. A. Cravo, A. Gourlay, & B. Becker. (2009). SME and regional economic growth in Brazil. WP 2010-01.
- Taiwo, A., A. M. Ayodeji and A. B. Yusuf. (2012). Impact of Small and Medium Enterprises on Economic Growth and Development, American Journal of Business and Management 1(1), 18-22
- Udechukwu, F.N. (2003). Survey of Small and Medium Scale Industries and their Potentials in Nigeria, Seminar on Small and Medium Industries Equity Investments Scheme, publication No. 4, CBN training centre, Lagos.
- Y. M Kaigama, N.A Talib, H. Ashari. (2016). Moderating effect of financial literacy in the relationship between microfinance banks and small business survival. Indian Journal of Innovations and Developments. 5(12), December.