FINANCIAL INCLUSSION AND GROWTH OF SMALL AND MEDIUM SCALE ENTERPRISE IN NIGERIA

This research study investigated the impact of financial inclusion on the growth of small and medium scale enterprises in Nigeria from 2009Q1 to 2023Q4. Automated Teller Machine, Depositors with Commercial Bank, Borrowers from Commercial Bank and Credit to Private Sector were used as a surrogate for financial inclusion while small and medium scale enterprises contribution to gross domestic product was used to proxy growth of small and medium scale enterprises in Nigeria. The Augmented Dickey Fuller Unit Root and Auto-regressive Distributive Lag were used to ensure the stationarity status and analyze the variable. Central Bank of Nigeria (CBN), statistical Bulletin and World Banks World Development Indicators (WDI) were the major source of data collection. The unit root result showed that the variables were integrated of order zero I(0) and one I(1). As a consequence, a long run relationship was resorted between financial inclusion and growth of small and medium scale enterprise according to the bound test. Further finding showed that automated teller machine and commercial bank branches had significant positive relationship with share of small and medium scale enterprise to gross domestic product both in the long-run and short-run. However, depositors with commercial bank have a negative but significant relationship with share of small and medium scale enterprise to gross domestic product in the short-run while borrowers from commercial bank had significant positive relationship with share of small and medium scale enterprise to gross domestic product in short-run. Finally, it was reported that credit to private sector is positive and significant with share of small and medium scale enterprise to gross domestic product in the long=run. Hence, it was concluded that financial inclusion indices are key drives to the growth of small and medium scale enterprises in Nigeria. It was recommended amongst other that Central Bank of Nigeria (CBN): Should implement policies that encourage commercial banks to increase ATM deployment, especially in underserved rural and semi-urban areas, to improve SME access to financial services