Effect of access to credit on micro, small and medium scale output in Nasarawa State, Nigeria

Abstract

Nasarawa State is among states that have benefitted from different sources of credit. Therefore, this study examined the effect of access to credit on Micro, Small and Medium Scale Enterprises (MSMEs) output in Nasarawa State, Nigeria. Survey research design and questionnaire method of data collection were employed in the work. The questionnaire used composed of questions on respondent biodata, firm characteristics, questions on access to credit and MSMEs output was used as research instrument. The population of the study is MSMEs in Nasarawa State and the sample size 393 was determined using Yamane formula. However, the total of returned and well-filled copies of questionnaire were 363. Descriptive and ordinal logistic regression techniques were applied the to analyse the responses from the questionnaires and from the findings, it was revealed that access to credit had no significant effect on output growth of MSMEs, particularly credit accessed from commercial bank. However, short duration and higher volume of credit enhanced output growth of MSMEs. Thus, the study recommended that Central bank of Nigeria (CBN) should ensure that commercial banks’ lending cost is favourable for small businesses in order to reduce their cost of production and increase output. In addition, measures to effectively control inflation should be adopted by CBN so that MSMEs will able to acquire more inputs at cheaper rate and produce more output.