Abstract:
This study investigated the moderating effect of financial regulations on the relationship
between interest rate and access to finance by Small and Medium Enterprises (SMEs) in
Northern Nigeria. To achieve this, cross-sectional research design was employed to collect data
from the SMEs owners/managers in Northern Nigeria. Population of the study consisted of
SMEs in the sixteen states of Northern Nigeria, including FCT. The study adopted stratified
random sampling to select 493 respondents. Questionnaires were distributed and collected
through the personally administered method. Only 425 copies of the questionnaires were
considered usable out of the administered 493. A Partial Least Square Structural Equation
Modeling (PLS-SEM) was used to analyse the data with the aid of SmartPLS 3.2.8 and to test
the hypotheses of the study. The findings showed that interest rate had negative and significant
effect on access to finance. The moderating effect of financial regulations was established to be
significant. The study, therefore, concluded that effective implementation of financial
regulation can improve access to finance by SMEs. Thus, the study recommended that CBN
should continue to implement policies that will reduce interest rates to enable SMEs in Northern
Nigeria access funds such as reduction in Monetary Policy Rate (MPR) and Cash Reserve Rate
(CRR) and the open market operations.
