How the Financial Liberalization Improved the Flow of External Finance for SMEs in Nigeria

Atsede Woldie, Adeniji Kolawoleadeniji

    Research output: Contribution to journalArticlepeer-review

    Abstract

    This study examines how financial liberalization has improved access to external finance for small and medium scale enterprises (SMEs) in Nigeria. We used new coding rule to measure the extent of financial sector liberalization in Nigeria. Using principal component analysis (PCA), correlation among the financial liberalization components was interacted with the ratio of SMEs credit to GDP (PGDP) in order to measure the flow of credit to SMEs during the preliberalization and post-liberalization periods. The result from the PCA shows that the flow of credit to SMEs is mixed. The contributions of the first component are negative, followed by positive contributions in the next three components, thereafter showing positive and negative oscillations in the remaining components. An economic interpretation of the results vis-à-vis ratio of SMEs to GDP is that the contributions of behavior of credit to the principal components have been relatively unstable.
    Original languageEnglish
    Pages (from-to)20 - 30
    Number of pages10
    JournalInternational Journal of Banks and Bank Systems
    Volume3
    Issue number3
    Publication statusPublished - 1 Mar 2008

    Keywords

    • improved the flow of external finance in nigeria

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