Published Online:February 2025
Product Name:The IUP Journal of Bank Management
Product Type:Article
Product Code:IJBM030125
DOI:10.71329/IUPJBM/2025.24.1.48-65
Author Name:Daud Omotosho Saheed and Muftau Adeniyi Ijaiya
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:48-65
Small and medium enterprises (SMEs) play a major role in industrialization process and economic growth. The major catalyst and key success factor for the growth and development process of every economy is financing. However, literature shows that most of the financial institutions in Nigeria have given little preference to SMEs in credit allocation, which has continued to influence the productivity of this sector. Therefore, this study examines the effect of firm economic characteristics on credit rationing among registered SMEs in North Central Nigeria. The study employed cross-sectional research design. All the registered SMEs in North Central Nigeria formed the population of the study. The sample size of 384 respondents was determined by Yamane’s (1973) sample formula, which was randomly selected. A well-designed questionnaire was used to collect primary data from the 384 respondents. Structural equation modeling was employed using partial least square (PLS) to analyze the obtained data. The results reveal that financial risk profile, firm savings, and firm turnover have significant effect on credit rationing, while firm pricing, firm credit history, and firm earning capacity report an insignificant effect on credit rationing. The study concludes that firm economic characteristics affect credit rationing among registered SMEs in North Central Nigeria. Based on the findings, the study makes a few recommendations to the Central Bank of Nigeria.
Globally, the development of small and medium enterprises (SMEs) continues to be in the forefront of policy debates as they constitute an essential impetus to the growth and development of many countries. The importance of SMEs is fundamentally linked to their ability to create job opportunities, reduce income disparity, produce goods and services in the country and