UIJRT » United International Journal for Research & Technology

The Effects of Monetary Policy on Microfinance Banks’ Credit and The Performance of Small and Medium Scale Enterprises in Ekiti State

Total Views / Downloads: 195 

Cite ➜

Oluwapelumi, O.S., Boboye, A.L. and Olusegun, A.S., 2021. The Effects of Monetary Policy on Microfinance Banks’ Credit and The Performance of Small and Medium Scale Enterprises in Ekiti State. United International Journal for Research & Technology (UIJRT), 2(5), pp.37-47.


The study was to examine the effects of monetary policy on microfinance banks’ credit and the performance of small and medium scale enterprises in Ekiti State, South-west, Nigeria which has been an issue that has gained momentum among scholars of repute. Different relevant concepts and empirical reviews were carried out. Three hypotheses were formulated in line with the study objectives these were examined using different techniques of regression analysis to achieve the stated objectives. Data were sourced from the primary and secondary. The primary data were collected with the aid of a well structured questionnaire which was managed on the owners of the small and medium scale enterprises in the selected local government areas. While secondary data were sourced from the Central bank of Nigeria Statistical bulletin and National Bureau of Statistics. However, Non-linear Autoregressive distributed lag (NARDL) econometric techniques approach was applied on the secondary data. The choice of this method is informed by the fact that all the variables are not integrated of the same order (I). The results outcome reveals that monetary policy tools of money supply and inflation has positive and significant effect on bank lending under the study period. Also microfinance bank credit had meaningful effect on profitability of small and medium scale enterprises in both the short run and long run minding the effects of monetary policies. The third objective of, advisory services, consultancy services, pre-loan training had significant and positive effects on the profitability of SMEs. The equivalent is that the more these non-financial services are provided in the short run by the microfinance banks, the more the profitability of SMEs in the short-run. It was concluded that government should create an enabling environment for business opportunities to thrive in the country and that the conditions for accessing the credit facilities by the small and medium scale enterprises should be less stringent. That government should formulate policy that would make business activities of small and medium scale enterprises amenable and easy to conduct.

Keywords: Monetary policy, Performance, Small and Medium Scale Enterprises, Credit Facilities JEL Classifications: E51, E52


  1. Abereijo, O.A. and Fayomi, O. (2009(. Innovative Approach to SME Financing in Nigeria: A Review of Small and Medium Industries Equity Investment Scheme (SMIEIS). Journal of Social Sciences, 11(3), 219 – 227.
  2. Ajisafe, R. A., & Folorunso, B. A. (2002). The relative effectiveness of monetary policy in macroeconomic management in Nigeria. Africa Economic and Business Review. 3, (1)
  3. Akingunola, R.O. (2011). Small and Medium Scale Enterprises and Economic Growth in Nigeria: An Assessment of Financing Options. Pakistan Journal of Business and Economic Review, 2(1).
  4. Almeyda, G. & Branch, B.  (1999).  Sustainable banking with the Poor, Case Studies in Microfinance, Guatemala: The Case of Unión Popular and Unión Progresita  Amatitlaneca (UPA) Credit unions.  The World Bank, Washington.
  5. Anastasia, A. (2008). Measuring the Impact of Human Resources Management on Organizational Performance University of Macedonia (GREECE). Journal of Industrial Engineering and Management 01 (02): 119-142- ISSN: 2013-0853.
  6. Bencivenga, V. & Smith, B. (1991). Financial Intermediation and Endogenous Growth. The Review of Economic Studies, 58, 195–209.
  7. (Carr. J &. Tong, Z. (2002). Microcredit and Poverty Alleviation, The Case of Bangladesh. www. Researchgate.net  (7).
  8. Central Bank of Nigeria (2013). Draft National Microfinance Policy and Regulatory Guidelines for Nigeria.
  9. Central Bank of Nigeria (2005). Report from microfinance policy and programme development committee: January.
  10. Central Bank of Nigeria (2006). Guidelines and procedures for the establishment of microfinance banks in Nigeria.
  11. Canadian International Development Agency (CIDA) | Springer Link, link.springer.com Dalmar, E. (1946). Expansion and employment. America Economic Review, 19(37), 34-55.
  12. Harrod, R. F. (1939). An essay in dynamic theory. The Economic Journal. 49(193), 14-33.
  13. Hamid, E. S. and Susilo, S. (2010). Strategi Pengembangan Usaha Mikro Kecil dan Menengah di Provinsi Daerah Istimewa Yogyakarta.JurnalEkonomi Pembangunan, 12(1), 45-55.
  14. Hassan M.A and Olaniran S.O. (2011). Small Business Entrepreneurs Through AssistanceInstitutions: the Role of Industrial Development Centre, Osogbo, Nigeria. International Journal of Business and Management, 6(2), 213-226.
  15. Hossain, M. (2008). Nature and impact of green revolution in Bangladesh.  IFPRI and BIDS Research Report No. 67.  Washington, D.C:  International Food Policy Research Institute, Dhaka: Bangladesh Institute of Development Studies.
  16. Janson, T. (2002). Performance Indicators for MFI’s: Technical guide. Micro rate and Inter-American Development Bank. Washington, DC available at www.microrate.com {Accessed online 12/3/2020}
  17. Joseph, T.O. and Dansu, F.S. (2013). SMEs, Business Risks and Sustainability in Nigeria.European Journal of Business and Social Sciences, 2(9), 76-94.
  18. Katua, N. T. (2014). The Role of SMEs in Employment Creation and Economic Growth in Selected Countries.International Journal of Education and Research, 2(12).
  19. Kimemia, J. M (2004). Factors affecting Accessibility of Micro Finance Funds.Strategic journals.com
  20. Micro submit (2002). Preceedings of the 35th Annual ACM/IEEE International Symposium.
  21. Mosley, P. (2014). Microenterprise finance. Is there a conflict between growth and poverty alleviation? World Development. 26(50), 783-790.
  22. Nnana, O. J. (2004). Financial sector development and economic growth in Nigeria: An empirical investigation. Economic and Financial Review. 42(3), 1-17.
  23. Obasan, K. A. & Arikewuyo .K. A. (2012). The Effect of Pre-post Bank Consolidation on The
  24. Accessibility of Finance to SMEs in Nigeria. Business and Management Research, 1(3), 108-120.
  25. Obiwuru, T., Okwu, A., Akpa, V. & Nwankwere, I. (2011). Effects of leadership style on organizational performance: A survey of selected (SSE) Lagos Nigeria. Australian Journal, of Business and Management Research. 1(7), 100-111.
  26. Otero, M. (1999). Bringing development back into microfinance. Journal of microfinance, 3(5), 19-30.
  27. Rosli, M. (2011). Determinants of small and medium enterprises in the Malaysian auto parts industry. African Journal of Enterprises management, 8235-241, 5(20).
  28. D, & Martin, B. (1998). Informal Credit Transactions of Micro-credit Borrowers in Rural Area. OnlineLibrary.willy.com
  29. Susilo,S.Y. (2010). Peran Perbankan Dalam Pembiayaan UMKM di Propinsi DIY. Journal Keuangandan Perbankan, 14(3), 467-478.
  30. United Nations (2005). Building inclusive financial sectors to achieve  the  millennium development    International Year of Micro-Credit.  New York.
  31. Yaron, J. B. (1998). Rural finance uses designed and world practice. Washington Agricultural Natural Resources Development.
  32. Williams, J. & Anderson, E.  (1991). Job satisfaction and organizational commitment as predictor of organisational citizenship and in-role behaviours. Journals of management, 17(3), 7-55.

For Conference & Paper Publication​

UIJRT Publication - International Journal