Nigerian Journal of Banking and Financial Issues (NJBFI)

EFFECT OF FINANCIAL INCLUSION ON PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN NASARAWA STATE, NIGERIA

Abstract

This study examined the effect of financial inclusion on the performance of small and medium enterprises in Nasarawa State, Nigeria. It used a survey research design, with a population of 10,728 registered SMEs in the state. Out of this, a sample size of 483 was chosen using a mix of purposive and stratified random sampling techniques to select the respondents. The research relied on an adapted questionnaire for data collection, which was then analyzed using partial least squares structural equation modeling. The results showed that the performance of small and medium-sized businesses in Nasarawa State, Nigeria, is positively and statistically significantly impacted by access to financial services. On the other hand, the cost of these financial services has a positive but statistically insignificant impact on the performance of small and medium-sized businesses in Nasarawa State, Nigeria at a 5% significance level. It therefore concludes that both access to and the cost of financial services play a role in influencing SME performance. Based on the findings, it recommended that Nasarawa State's SMEs should strengthen their financial management abilities and bargain for better loan conditions, cheaper interest rates, and fewer transaction costs. By boosting their financial literacy and considering alternative financing options like microfinance or cooperative societies, SMEs can better manage financial costs, easing the pressure on their operations.