The Impact of Micro, Small and Medium-Scale Enterprises (MSMEs) Financing on Economic Welfare in Nigeria
Keywords:
Economic Welfare, Financing, Funding, Government, MSMEs, Private FinancingAbstract
The study examines the effects of Micro Small and Medium-Scale Enterprises (MSMEs) financing on economic welfare in Nigeria and to also determines whether or not private sectorled institutions MSMEs financing and government MSMEs intervention funding are complementary or substitutes. Micro Small and Medium-Scale Enterprises (MSMEs) financing were measured by government loan to MSMEs, while economic welfare is measured by per capita income. The autoregressive distributed lag (ARDL) model was employed in analyzing the data. We find a positive and statistically significant effect of MSMEs financing on economic
welfare in the long and short run. Government intervention funding had a positive and statistically insignificant effect on welfare. It was also found that government MSMEs intervention funding and the private sector-led institutions MSMEs financing were substituted in the long run but in the short-run, government MSMEs intervention funding and the private sector-led institutions MSMEs financing had an insignificant complementary effect on economic welfare. Other variables such as the external debt and population play some diverse roles in enhancing economic welfare in the long and short run. We recommend encouraging private
sector-led institutions MSMEs financing by making it conducive for the private sector-led institutions to finance MSMEs.
