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MONETARY POLICY AND SMALL AND MEDIUM ENTERPRISES’ PERFORMANCE IN NIGERIA 1970-2015

Wakeel Atanda Isola, Ekundayo Peter Mesagan

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Abstract

The study focused on the effect of monetary policy on the performance of Small and Medium Enterprises (SMEs) in Nigeria over the period of 1970 to 2015. Variables like credit to the private sector, interest rate, inflation rate, and exchange rate were employed as explanatory variables, while SME's output was employed as a dependent variable. It was observed that credit to the private sector and inflation rate have a negative effect on SMEs' output, while the exchange rate and interest rate have positive effect on SMEs output over the period. Consequently, it is concluded that monetary policy in Nigeria has not been favourable to the performance of the SME sector in Nigeria. It is therefore recommended that the central bank should ensure flexibility in its monetary policy regime and also pursue an expansionary policy that will stimulate the performance of SMEs in Nigeria.

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What this paper is about

The study focused on the effect of monetary policy on the performance of Small and Medium Enterprises (SMEs) in Nigeria over the period of 1970 to 2015. Variables like credit to the private sector, interest rate, inflation rate, and exchange rate were employed as explanatory variables, while SME's output was employed as a dependent variable. It was observed that credit to the private sector and inflation rate have a negative effect on SMEs' output, while the exchange rate and interest rate have positive effect on SMEs output over the period. Consequently, it is concluded that monetary policy in Nigeria has not been favourable to the performance of the SME sector in Nigeria. It is therefore recommended that the central bank should ensure flexibility in its monetary policy regime and also pursue an expansionary policy that will stimulate the performance of SMEs in Nigeria.

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Available abstract

The study focused on the effect of monetary policy on the performance of Small and Medium Enterprises (SMEs) in Nigeria over the period of 1970 to 2015. Variables like credit to the private sector, interest rate, inflation rate, and exchange rate were employed as explanatory variables, while SME's output was employed as a dependent variable. It was observed that credit to the private sector and inflation rate have a negative effect on SMEs' output, while the exchange rate and interest rate have positive effect on SMEs output over the period. Consequently, it is concluded that monetary policy in Nigeria has not been favourable to the performance of the SME sector in Nigeria. It is therefore recommended that the central bank should ensure flexibility in its monetary policy regime and also pursue an expansionary policy that will stimulate the performance of SMEs in Nigeria.

Key concepts: Monetary policy, Exchange rate, Inflation (cosmology), Monetary economics, Interest rate, Private sector, Flexibility (engineering), Business

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MONETARY POLICY AND SMALL AND MEDIUM ENTERPRISES’ PERFORMANCE IN NIGERIA 1970-2015 — Research Paper | ScholarLens