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