THE IMPACT OF BANKING REFORMS ON SMALL AND MEDIUM SCALE ENTERPRISES (SMES) (ECONOMICS PROJECT TOPICS AND MATERIALS)
ABSTRACT
The impact of Banking Sector Reforms on Small and Medium Scale Enterprises is a phenomenon that needs proper and adequate attention in the wake of global economic depression affecting the world generally as proper attention can put a full stop to problem of unemployment confronting Nigeria as a whole.
The study conducted and assessed the impact of banking reforms on Smal1 and Medium Scale Enterprises in Lagos State, a case study of Otto – Awori, Local Government Development Area. And to show the relationship that exist between capital and growth of Small and Medium Scale Enterprises.
The project reviewed the nature, causes and effect of loan delinquency by Nigeria banks towards Small and Medium Scale Enterprises.
Data were predominantly gathered, using questionnaire administered on 35 selected Smal1 and Medium Scale Enterprises in Otto – Awori Local Government Development Area.
The data collected were analyzed using the descriptive and inferential statistical analysis; chi-square statistic was precisely employed in the analyzing of the data collected.
This study revealed that reforms of banks have not helped small and medium scale enterprises in terms of loan disbursement to them so as to facilitate their going concern as a business enterprise.
However, this study concluded that the government should proffer solution to the challenges and constraints militating against SMEs and to have a better understanding of the lending practices of banks which ultimately prevent banks from expanding SMEs portfolio.
CHAPTER ONE
1.0 INTRODUCTION
For both developing and developed countries, small and medium scale firms play important role in the process of industrialization and economic growth. Apart from increasing per capital income and output, SMEs create employment opportunities, enhance regional economic balance through industrial dispersal and generally promote effective resource utilization considered critical to engineering economic development and growth. However, the role played by SMEs, notwithstanding its development is everywhere constrained by adequate funding and poor management. The unfavorable macro-economic development has also been identified as one of the major constraint which most times encourage financial institutions to be risk – averse in funding small and medium scale businesses. The reluctance on the part of financial institutions to fund SMEs can be explained in terms of insufficient capital base of banks and information asymmetry that often exists between SMEs and lending institutions.
In Nigeria, the financial system is dualistic and consists of formal and informal systems. The informal financial system comprise of the institutions such as money lenders, rotating savings and credit associations for example, that are virtually outside the control of the established framework. The formal financial system refers to an organized, registered and. regulated sector of the financial system. The formal financial system comprises the banking sector, non – banking sector, and the financial markets. Structurally, the financial systems as at December 2008 comprises the Central bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), The Security and Exchange Commission (SEC), the National Insurance Commission (NAICOM), 25 deposit money banks, 6 development banks, 757 Micro – Finance Banks, 1 stock exchange, l commodity exchange, 5 discount houses, 9 primary mortgage banks, 112 finance companies and 581 stock brokers (CBN, 2008).
