ROLE OF COMMERCIAL BANKS IN FINANCING SMES
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ROLE OF COMMERCIAL BANKS IN FINANCING SMES
Chapter one
INTRODUCTION
1.3 Background to the Study
Small and medium-sized enterprises (SMEs) are often regarded as the foundation of economic growth in all countries. They contribute significantly to Nigeria’s economic growth, accounting for 97.2% of all enterprises in the country.They also help to drive national development by improving the distribution of income in both functional and nominal terms.
In emphasising the importance of SMEs, Rogers (2014) stated: they enhance capacity building as they serve as entrepreneurial training avenues; they create more employment opportunities; per unit of investment because of their labour intensive operations;
they achieve a much more relative high value added operations because they are propelled by basic economic activities that depend mostly on locally sourced raw materials;
they provide feeder industry services as they Despite their catalytic significance in countries’ economic liberation, SMEs in Nigeria have significant operational obstacles, including financial issues. Poor finance stifles around 80% of small and medium-sized firms.
The study’s goal is to assess the influence of commercial banks on the financing of SMEs in Nigeria, using First Bank plc as a case study.
1.4 Statement of the Problem
Despite their important function, SMEs are disproportionately affected by a shortage of money to operate and expand their enterprises. In light of this, commercial banks in Nigeria perform crucial roles in meeting the capital and operating finances required by SMEs.
1.3 Research Questions.
1. What are the characteristics and roles of SMEs?
2. What is the nature of the finance difficulty for SMEs?
3. What role do commercial banks play in financing Nigeria’s SMEs?
4. What are first bank’s funding possibilities for SMEs in Nigeria?
1.4 Object of the Study
1. Evaluate the nature and roles of SMEs in Nigeria.
2. Determine the role of commercial banks in financing SMEs.
Nigeria
3. Evaluate the role of first banks in financing SMEs in Nigeria.
1.9 Significance of the Study
The study will highlight the role of SMEs in the economy.
The study will examine the role of commercial banks in financing SMEs in Nigeria.
The study will look at the funding choices that First Bank Plc provides to Nigerian SMEs.
The study shall act as a veritable source of knowledge for managers and consultants
1.10 Statement of Hypothesis
1 H0: Small and medium-sized enterprises do not contribute much to the economy.
H1 SMEs contribute significantly to the economy.
2 H0 Small and medium-sized enterprises face significant financial challenges.
H1 Small and medium-sized enterprises face little financial challenges.
3 H0 The first bank’s impact on financing SMEs is low.
H1 The influence of the first bank on financing SMEs is substantial.
1.11 Scope of Study
The study will evaluate the role of commercial banks in financing SMEs in Nigeria.
It will explain the nature and significance of SMEs, as well as analyse their financing issues in Nigeria.
1.12 Definition of Terms
SME:
In Nigeria, the Small and Medium Industries Enterprises Investment Scheme (SMIEIS) defines SMEs as any firm with a maximum asset base of N200 million (excluding land and working capital) and a workforce of 10 or more employees.
The federal ministry of commerce defines SMEs as businesses with a total investment of up to N750,000 (excluding land costs but including capital), paid employment of up to fifty people, an employee relationship, a labor-intensive operation, simple technology, ownership and management fusion, and limited capital access.
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