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Effect Of Deposit Money Banks Credit On The Performance Of Micro, Small And Medium Scale Enterprises In Nigeria
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CHAPTER ONE
1.Introduction
Economic development is a process whereby
an economy’s real national income increases over a long period of time.
The term economic development also refers to achievement by poor
countries of higher levels of real per capita income and of improved
conditions of living for their people. Maintaining development is a
problem for rich countries, but accelerating development is an even more
pressing matter for poor countries (Ojo, 2010). The role of finance in
economic development is widely acknowledged in literature. It is argued
that financial intermediation through the banking system play a pivotal
role in economic development by affecting the allocation of savings,
thereby improving productivity, technical change and the rate of
economic growth (Sanusi, 2011).
For both developing and
developed countries, micro, small and medium scale firms play important
roles in the process of industrialization and economic growth. Apart
from increasing per capita income and output, MSMEs create employment
opportunities, enhance regional economic balance through industrial
dispersal and generally promote effective resource utilization
considered critical to engineering economic development and growth
(Sule, 1986; Udechukwu, 2003). Micro, small and medium enterprises
(MSMEs) are companies whose headcount or turnover falls below certain
limits. The definitions change over time and depend, to a large extent,
on a country’s level of development. Thus, what is considered small in a
developed country like the USA could actually be classified as large in
a developing country like Nigeria. However, the definition of MSMEs in
Nigeria as contained in the National Policy on Micro, Small and Medium
Enterprises (SMEDAN, 2007) is adopted in this study (Table 1), because
it is in line with the definition in other developing countries like
Indonesia (Timberg, 2000) as well as in the European Union (EU)
(European Commission, 2007).
The National Policy document states
that, where there exist a conflict in classification between employment
and assets criteria (for example, if an enterprise has assets worth
seven million naira (N7m) but employs 7 persons), the employment-based
classification will take precedence and the enterprise would be regarded
as micro (SMEDAN, 2007). This is because employment-based
classification tends to be relatively more stable definition, given that
inflationary pressures may compromise the asset-based definition.
1.1Problem Statement
In
Nigeria today, incidence of poverty is still very high. According to
the World Bank, in 2010, 68 percent of total Nigerian population was
said to be living on less than $1.25 per day compared with 18.1percent
in Indonesia. In the same vein, per capita income has not fared better.
It was as low as US$1,180 in 2010 compared with US$2,500 in Indonesia
(World Bank, 2012). The reason for evolving several credit schemes in
the past was to accelerate economic development in the country through
the MSMEs. Since the MSMEs represent over 90 percent of the agricultural
and industrial sectors in terms of the number of enterprises and
account for about 50 percent of Nigeria’s GDP together with the MSMEs in
the other sectors of the economy, the acceleration of their growth and
development will certainly have a positive spill over effect on the
whole economy. This has not been the case because of their lack of
access to adequate finance.
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ABSRACT - [ Total Page(s): 1 ]Banks are the most important example of a class of institutions called financial intermediaries, firms that extend credit to borrowers using funds raised from savers. However, credit is not an end in itself; it is a means to an end. The ultimate goal is to affect productivity. For both developing and developed countries, micro, small and medium scale enterprises (MSMEs) play important roles in the process of industrialization and economic growth. Thus, this paper set out to empirical ... Continue reading---
