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The impact of bank lending on the growth of small and medium business in Osun State

 Department:Economics  
 By:usericon mutun28  

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Abstract
The banking system which provides majorly short term finance is critical for economic growth and development. This study therefore, examines the bank lending and small-medium enterprises in Osun state, Nigeria. Based on the credit rationing theory, the methodology of the study was developed around primary data where 200 small-medium entrepreneurs were sampled through questionnaire. The descriptive statistics and Ordinary Least Square (OLS) technique were adopted. The findings revealed that the sex and the age of the small and medium business owners, household size, level of income, number of employees, the interest rate on borrowed fund and amount of loans had significant impact on the establishment and the growth of small-medium businesses in Osun state. Results also showed that the relationship between all the major factors determining the relationship between the challenges in bank lending and prospects of small and medium enterprises were significant. The major variables are amount of loans, collateral securities, moratorium and repayment period and profit after loans. The findings from this study led to the conclusion that there is significant relationship between the bank lending and prospects of small and medium enterprises since majority of the entrepreneurs indicated that banks are willing to assist the SMEs and the profit of the business increased after the loans had been borrowed. The study therefore recommends that concerted efforts should be made by Nigerian policy makers to encourage reduction ininterest rate in order to encourage more borrowing and investment– most importantly for SMEs and a a policy that will regulate and guide the affairs of banks so that the loans can be supplied in a used-friendly terms and conditions. ...
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