Banking Sector and the Development of SMEs in Osun State

Abstract

The research study investigates the banking sector and the development of small and medium scale enterprises in Osun State. The primary purpose of the study is to know how SMEs can be developed through the intervention of the banking sector. The hypothesis of this study is that SMEs do not play an important role in economic growths and developments of Osun State.Descriptive research design was adopted. The population of the study is the entire SMEs in Osun state and United Bank for Africa (UBA). Questionnaires were used as an instrument of primary data collection. Purposive sampling technique was used to select the sample, correlation analysis was employed. 170 questionnaires were administered but 150 were returned which left 20 questionnaires irrecoverable. Tables and simples percentages were used in data presentation. Four hypotheses were formulated. The finding of the study reveals that there is a positive correlation between loans granted by banks and the growth and development of SMEs in Osun State also, that SMEs cannot be concentrated in Osun State if they are not effectively financed due to the relationship that exists between the banks and SMEs. Based on the findings, it was recommended that guidelines/schemes by commercial banks to finance SMEs needs to be flexible to accommodate the small and medium scale entrepreneurs, the study also recommends that the financial institution needs to put more effort in financing SMEs, their role need to be felt by the SMEs in terms of growth and development.

Keywords: banking sector, finance, economic growth, SMEs, loans, entrepreneur