IMPACT OF FINANCIAL INNOVATION ON PERFORMANCE OF MICRO AND SMALL SCALE BUSINESS IN MAIDUGURI BORNO STATE, NIGERIA

This study examined the effect of financial innovation on the performance of micro and small-scale enterprises (MSEs) in Maiduguri, Borno State, Nigeria. Specifically, the study investigated how financial innovation influences access to finance, operational efficiency, profitability and business growth, as well as the challenges faced by MSEs in adopting financial innovations. A descriptive survey research design was adopted, and data were collected through structured questionnaires administered to 100 MSE operators, out of which 92 were properly completed and returned, representing a 92% response rate. Data were analyzed using descriptive statistics, including frequencies, percentages, and mean scores. A benchmark mean of 2.50 was used to test the study’s hypotheses. The findings revealed that financial innovation significantly improves access to finance by reducing collateral requirements and enhancing the availability of digital financial services. It also positively influences operational efficiency by reducing transaction time, paperwork, and long queues, while improving record-keeping. Furthermore, financial innovation was found to enhance profitability and business growth through faster payments, increased customer satisfaction, and improved working capital. However, the study also identified significant challenges limiting the full benefits of financial innovation, such as poor network quality, inadequate electricity supply, high transaction fees, low digital literacy, and fear of fraud and cybercrime. The study concludes that financial innovation plays a vital role in enhancing the performance of MSEs in Maiduguri despite existing constraints. It therefore recommends improved infrastructural support, reduced transaction charges, enhanced cybersecurity measures, and capacity-building programs to promote digital literacy among MSE operators. These measures would help maximize the benefits of financial innovation and support sustainable growth of micro and small-scale businesses.