MICROFINANCE BANKS AND SMES RELATIONSHIP: EVIDENCE FROM AKWA IBOM STATE

ABSTRACT The impact of microfinance banks on SMEs cannot be overemphasized. But in Akwa Ibom state, it has been observed that there has been a reduced impact of microfinance banks on SMEs. The reduced impact of microfinance banks on Small and Medium Enterprises (SMEs) has led to several critical challenges that have hampered the growth and sustainability of the local business sector. This study examined the microfinance banks and SMEs relationship: evidence from Akwa Ibom State. This study was anchored on financial intermediation theory and utilized expost facto research design. Population covered all 16 listed micro finance banks in Akwa Ibom State. Convenience sampling technique was used as sampling technique. Data was collected from secondary sources including Bureau of statistics, and CBN Statistical Bulletin of various editions. Hypotheses were tested using regression analysis. Findings revealed that; there is positive and significant impact of financial inclusion on small and medium enterprises in Akwa Ibom State, there is positive and significant impact of business development services on small and medium enterprises in Akwa Ibom State and there is positive and significant impact of financial inclusion on small and medium enterprises in Akwa Ibom State. Recommendations amongst others included; to enhance the positive impact of financial inclusion, policymakers and financial institutions in Akwa Ibom State should develop targeted financial products and services tailored to the unique needs of small and medium enterprises (SMEs).