Supply-Side Factors and Financial Inclusion of Micro, Small and Medium Enterprises in Southwest, Nigeria.

Abstract:

The study investigated the nexus between supply-side factors and financial inclusion of Micro, Small and Medium Enterprises (MSMEs) in Southwest, Nigeria. The study population comprised of MSMEs and Deposits Money Banks (DMBs). Using survey research design and structured questionnaires, a multistage sampling technique was adopted to collect data from both MSMEs and DMBs. Data were analysed using descriptive and inferential statistics. Partial Least Square-Structural Equation Modeling (PLS-SEM) was used for inferential analysis. Descriptive analysis result showed that adequate ICT and sufficient number of banks’ branches are the leading supply-side factors capable of boosting financial inclusion of MSMEs. Empirical findings demonstrated that supply-side factors had positive and significant influence on financial inclusion of MSMEs. In addition, the results showed that bank proxy by ATM availability and closeness as well as sufficient number of POS are critical drivers of MSMEs’ financial inclusion. The study concluded by underscoring the critical role of supply-side factors in boosting financial inclusion of MSMEs in Southwest, Nigeria. Towards enhancing MSMEs’ financial inclusion, the study recommended that DMBs should improve the quality of services provided through ATMs with sufficient POS agents’ outlets that support seamless account opening and debit cards issuance.