THE IMPORTANCE OF COMMERCIAL BANKS ON THE DEVELOPMENT OF SMALL-SCALE INDUSTRIES IN NIGERIA

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CHAPTER ONE/INTRODUCTION

Small and medium-sized businesses have typically gotten little attention, although playing significant roles in our emerging economy and employing approximately three times as many people as large-scale industry. Since the federal government changed its policy to place more of a focus on small and medium-sized firms in order to achieve self-reliance, there have been several conversations and publications on the responsibilities banks should play in assisting and advising them.

Small businesses are universally acknowledged as being crucial to a country’s economic growth. Empirical research demonstrates that they boost a country’s level of productivity, reduce poverty, and aid in creating jobs. The government has made major investments in fostering SME growth and entrepreneurship in recognition of the essential role SMEs play in Nigeria’s economic development. SME development is essential to a country’s industrialization. A key strategy for expanding SMEs is simple access to funding.

Afolabi (2013) asserts that the lack of lending by banks, particularly commercial banks, has impeded Nigeria’s industrial development process from developing a robust and flourishing SMEs sector during the preceding several years. The goal of commercial banks’ intermediary position is to enable them to provide financial assistance to SMEs. SMEs need sufficient finance in the form of short- and long-term loans in order to participate in the economy (Olachosim, Onwuchekwa & Ifeanyi, 2013).

Nearly three times as many people are employed by small companies as by big ones, yet they often get little attention while being crucial to our growing economy. Since the federal government changed its policy to place more of a focus on small and medium-sized firms in order to achieve self-reliance, there have been several conversations and publications on the responsibilities banks should play in assisting and advising them.

Small businesses are universally acknowledged as being crucial to a country’s economic growth. Empirical research demonstrates that they boost a country’s level of productivity, reduce poverty, and aid in creating jobs. The government has made major investments in fostering SME growth and entrepreneurship in recognition of the essential role SMEs play in Nigeria’s economic development. SME development is essential to a country’s industrialization. A key strategy for expanding SMEs is simple access to funding. Afolabi (2013) asserts that the lack of lending by banks, particularly commercial banks, has impeded Nigeria’s industrial development process from developing a robust and flourishing SMEs sector during the preceding several years.

The goal of commercial banks’ intermediary position is to enable them to provide financial assistance to SMEs. SMEs need sufficient finance in the form of short- and long-term loans in order to participate in the economy (Olachosim, Onwuchekwa & Ifeanyi, 2013). It’s crucial to understand that small and medium-sized firms’ performance in developing nations depends greatly on the quality of the investment they get. Without a doubt, if money were used properly and effectively, SMEs may run more effectively. The success with which each country’s financial system contributes to the growth and development of its economy, however, primarily relies on how far advanced that development is. The high requirements of SMEs and the banks’ limited supply capacity still differ greatly. The capacity to pool resources to satisfy SME credit requests is a strength of traditional commercial banks, who are integral parts of the financial systems of almost all countries.

It’s crucial to understand that small and medium-sized firms’ performance in developing nations depends greatly on the quality of the investment they get. Without a doubt, if money were used properly and effectively, SMEs may run more effectively. The success with which each country’s financial system contributes to the growth and development of its economy, however, primarily relies on how far advanced that development is. The high requirements of SMEs and the banks’ limited supply capacity still differ greatly. The capacity to pool resources to satisfy SME credit requests is a strength of traditional commercial banks, who are integral parts of the financial systems of almost all countries.

 

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