The Degree of Accessibility to Credit Facilities from Financial Institutions by Small and Medium Enterprises: Evidence from Nigeria

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The Degree of Accessibility to Credit Facilities from Financial Institutions by Small and Medium Enterprises: Evidence from Nigeria

Sylvia Nnenna Eneh PhD1 & Chukwuemeka Jacob PhD2
1 2 Department of Accountancy, University of Nigeria, Enugu Campus, Nigeria

Abstract

This study investigates the degree of accessibility to credit facilities from financial institutions by Small and Medium Enterprises (SMEs) in Nigeria. The primary objective is to evaluate the factors influencing the accessibility of credit to SMEs, with a focus on government policies, tax incentives, collateral requirements, and international funding sources. Specific objectives include examining the extent to which government policies support SMEs, assessing whether access to credit is the most significant problem for SMEs, determining the effect of tax incentives on credit access, evaluating the impact of collateral on credit eligibility, and investigating the role of international funding sources in supporting SME finance. The study employs a descriptive and analytical survey research design, focusing on 360 manufacturing SMEs in Anambra, Ebonyi, and Enugu states. Data were collected through structured questionnaires and analyzed using descriptive statistics, including frequency, percentages, means, and standard deviations, alongside inferential statistics such as one-sample t-tests and linear regression analysis. The research models explored the relationship between government policies, tax incentives, and collateral requirements with SME credit accessibility. Findings reveal that government policies significantly enhance access to credit, with microfinancing schemes and mandatory bank lending playing key roles in SME funding. The study identifies access to credit as the most critical challenge faced by SMEs in Nigeria, with financial constraints hindering their growth and sustainability. Tax incentives were found to have a positive and significant impact on improving credit access by easing financial pressures and attracting investment. Collateral requirements were also found to positively influence credit accessibility, as financial institutions favor businesses with collateral or strong credit histories. In conclusion, the study underscores the importance of robust government policies, tax incentives, and favorable collateral conditions in improving SMEs’ access to financial resources. It recommends that financial institutions reduce stringent collateral requirements and that the government enhance policies that provide easier credit access for SMEs. Furthermore, international financial agencies should be encouraged to increase their involvement in funding Nigerian SMEs to promote growth and development in this sector.

Keywords: SMEs; Credit Assessibility; Financial Institutions; Government Policies; Tax Incentives; Financial Constraints; Business Sustainability

IJAFIS 6(2)1-17Download

Cite as:
Eneh, S. N. & Jacob, C.  (2025). The Degree of Accessibility to Credit Facilities from Financial Institutions by Small and Medium Enterprises: Evidence from Nigeria. International Journal of Accounting, Finance, and Investment Strategies, 6(2), 1-17. https://doi.org/10.5281/zenodo.15208744 © 2025 The Author(s). International Journal of Accounting, Finance, and Investment Strategies published by ACADEMIC INK REVIEW.

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