BANKS’ LENDING RATES AND SMALL AND MEDIUM ENTERPRISES (SMEs) OUTPUT GROWTH RATE IN NIGERIA

Abstract

There is a perception that Nigeria banks’ lending rates tend to be unfavorable to SMEs. This may have direct impact on SMEs output growth rate of the Nigeria economy. This paper examined whether banks’ lending rates impact on output growth rate in Nigeria. The study made used of secondary data sourced from Central Bank of Nigeria Statistical bulletins and Nigeria Bureau of Statistics. The research design adopted time series correlational research design.  The ordinary least square regression technique was used for analysis. The result of the inferential statistics revealed that all the variables used in the study are stochastic, asymmetric and leptokurtic with outliers in their raw forms. Thus, it is documented from the analysis that positive multiplier effects run from monetary policy rate and Treasury bill rate to SMEs output growth rate while prime lending rate in the short and long-run have negative multiplier effect on Small and Medium Enterprises output growth rate. The result confirms that monetary policy rate at present has significant influence on lending rates as well as SMEs output growth rate. The study recommends that the monetary authority such as Central Bank of Nigeria should fix monetary policy rate that will not be attractive to banks for diversion of SMEs funds.as this will encourage lending to SMEs.