ROLE OF MONEY DEPOSIT BANKS IN FINANCING SMALL SCALE BUSINESS
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ROLE OF MONEY DEPOSIT BANKS IN FINANCING SMALL SCALE BUSINESS
This study uses the Nasarawa branch of the United Bank for Africa as a case study to examine the function that money deposit banks play in financing small businesses. Examining the effects and contributions of money deposit banks in Nigeria’s small business finance is the main goal of this study.
Five chapters in the research project provide a detailed explanation of the function of money deposit banks in small company finance. Introduction, study background, problem statement, study importance, and study limitation are all covered in chapter one.
The researcher spent time reviewing the same relevant literature and theoretical framework that are directly related to the chapter two study of small scale. The study design and method discussed in Chapter 3 are used to gather research data.
Chapter 4 presents the tabulated data with clarity and makes available analysis of it. Chapter five concludes with a summary of the findings, a conclusion, and recommendations.
1.1 BACKGROUND OF THE STUDY, CHAPTER ONE OF THE ROLE OF MONEY DEPOSIT BANKS IN FINANCING SMALL SCALE BUSINESSES
Small businesses have played a significant role in the effort to make this nation economically independent. This is based on the legalisation that small-scale businesses are desirable globally;
as a result, it is a way to lower the country’s unemployment rate and so increase the Gross Domestic Product (GDP). Modern technical development in developed nations is a result of the emergence of small-scale businesses and enterprises.
Small businesses are regarded as a fulcrum for the development of technology and a country’s independence. There are many different types of business ventures in the world of commerce.
These commercial activities span both private businesses and government corporations. Small-scale businesses are defined as follows by the Central Bank of Nigeria’s Monetary Policy and Programmes Circular to Commercial and Merchant Banks:
those whose annual revenue does not surpass 500,000. A small-scale business is one that has less than 50 (fifty) full-time employees and major assets in capital equipment, plant, and working capital of less than $250,000. This definition was provided by the Industrial Research Unit of the University of Ife.
1.2 STATEMENT OF THE PROBLEM
The value of small businesses in Nigeria and possibly elsewhere in the world cannot be overstated.
However, structural issues have a significant impact on the small-scale enterprise sub-sector. These include a lack of funding, poor infrastructure, a lack of technological expertise, and a small local market. Small-scale company development in Nigeria has been limited by these issues.
Massive unemployment, rural-urban mobility, poverty, and an excessive reliance on foreign nations are further issues. the growing relationship between this and the reality that the country’s capacity is where its growth engine may be found.
Small capacity requirements mean that small-scale industry is supported by the argument that indigenous businesses can afford it. Small-scale businesses employ people, use more regional raw materials, and employ low-tech equipment.
1.3.1 OBJECTIVES OF THE STUDY
It is crucial to conduct research on the influence and role of commercial banks in Nigeria’s small business finance system. Given the importance of commercial banks to the expansion and development of any country’s economy, the specific aims and objectives of this study aim to address issues like:
To investigate the role that commercial banks play in Nigeria’s small business funding
To investigate other avenues for assisting small businesses in Nigeria
Determine the main barrier preventing the growth of small businesses in Nigeria.
1.4 RESEARCH QUESTIONS
The following issues can now be raised in relation to the research topic of “The Role of Money Deposit Banks In Financing Small-Scale Business” by the researcher and will be addressed during this study.
Are commercial banks required to provide financing for small businesses?
Do money deposit institutions run into issues when financing small businesses?
Have money deposit banks changed the way small businesses are run and operate?
Do small businesses contribute significantly to the growth of the national economy?
1.5 RESEARCH HYPOTHESIS
Money deposit institutions do not significantly help with the funding of small businesses, according to Ho.
Hello: In Nigeria, money deposit banks provide a substantial contribution to the financing of small businesses.
1.6 SCOPE OF THE STUDY
The goal of this study is to examine how Nigerian money deposit banks have helped to finance small businesses. However, because there are so many commercial banks in the nation, the study is solely applicable to the United Bank for Africa (UBA) Nasarawa branch.
1.7 SIGNIFICANCE OF THE STUDY
The study’s significance lies in its ability to identify and focus government efforts, encourage economic growth, foster the development of indigenous technologies, and create jobs.
There is no doubt that a wide range of stakeholders in the small business scheme would benefit from this work, particularly the owners (promoters) and staff of business organisations, students, the government, investing financial institutions, and the general public.
OUR OWNER
A company organization’s owners or promoters are free to approach any bank of their choosing in order to obtain these inexpensive funds that do not generate interest.
It boosts their confidence by stimulating the growth and promotion of entrepreneurial abilities. Banks join the company as equity shareholders and partners, contributing their technical and financial know-how to its expansion.
EMPLOYEES
Since greater working capital will be available to the company, all employees are interested in their wage settlement. It would signify a good chance for increased productivity at the same time as the company’s profitability would rise, effectively ensuring the employee’s job security.
GOVERNMENT
Because strong management policies influence good governance and garner the government’s full support, the government or policy maker appears to be the main winner.
As the economy’s capacity-building progresses, productivity rises as well, raising citizens standards of living and reducing social issues like youth unrest-related insecurity in the country.
COMMON PUBLIC
Every economic tool is tested against the interests of the general public, who are also expected to gain from effective policies that benefit the public and vice versa.
1.8 LIMITATIONS OF THE STUDY
The investigation turns out to be more challenging than initially thought; at the outset of this research activity, few problems were discovered. More issues were, however, discovered as the investigation went on. Concerning the makeup of the responses, one issue was encountered.
In some circumstances, it was challenging to meet the management, and when it did happen, it was challenging for them to give the researcher their whole focus right away.
Another issue was the worry some respondents had that the government will utilise the data collected from them in one clay. This was especially evident during the respondents’ oral interviews.
1.9 DEFINITION OF TERMS
Anyeale (1993) defined capital as the wealth or property that can be used to develop more riches in his book named “comprehensive economics.” It also refers to the money used to invest in a company.
BANK: According to Section 61 of the Bank and Other Financial Institution Decree (BOFID), a bank is any business that accepts deposits on current accounts,
savings accounts, and other similar accounts, pays or collects checks drawn on or paid into accounts by customers, provides financing, or any other business that the governor may designate as a banking business by order that is published in the gazette.
COMMERCIAL BANK: In his book “Business Finance and Banking in Nigeria,” Osubor J. U. claims that commercial banks are a country’s most significant financial institution because of the way in which they conduct their services uniquely and differently from other types of financial institutions.
Financial institutions are institutions that give money to organisations so they can meet their financial obligations, according to Ekeziel ES (1993), “The Element of Banking.”
FUND MANAGER: These businesses have been established and registered with
The Securities and Exchange Commission (SEC) and the Corporate Affairs Commission are responsible for overseeing bank investments in thriving small-scale businesses.
SCHEME: This is the government’s new policy for carrying out equity investments in small-scale businesses.
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