Assessment of Microfinance Banks Credit Administration on Entrepreneurship Development in Oyo State, Nigeria

Abstract

Entrepreneurship has been acknowledged as a catalyst for general economic wellbeing, skills acquisition, and employment generation. In Nigeria, Micro Finance Banks (MFBs) are mandated by the regulator to provide credit facilities to entrepreneurs to develop their businesses to succeed. This has not been quite so, as small businesses continued to fail. Issues surrounding the failures of small businesses despite the increasing number of MFBs have not been adequately investigated. Thus, prompt this study to assess the effect of MFBs credit administration on entrepreneurship development (ED). Stratified sampling techniques were used to select the sampled MFBs from senatorial districts of the State for the study. A structured questionnaire was administered to 5 staff at each of the randomly selected MFBs and 50 entrepreneurs from each of the selected MFBs. Descriptive analysis and influential statistics such as Pearson Product Moment Correlation (PPMC) was conducted. The MFBs credit administration variables had mean ranking scores of 4.21; 3.75; 3.87; 3.67; 3.78 and 1.87 for MLD, AMBL, ESD, AAS, MIC, and CS respectively. There was a significant relationship between each of the variables of MFBs credit administration and ED: MLD(P=0.856); AMBL(P=0.867); ESD(P=0.835); AAS(P=0.844); MIC(P=0.885) and CS (P=0.661). The regression coefficient of the effect of the MFB credit administration variables on ED were 0.437; 0.392; 0.051; 0.068; 0.054
and -0.990 for MLD, AMBL, ESD, AAS, MIC, and CS respectively. The study concluded that MFB credit administration has a significant positive relationship and influence on ED. However, conditions attached to CS made it difficult for entrepreneurs to optimally access credit from MFBs. The study therefore recommended that stringent conditions attached to the collateral security to access credit from MFBs should be reviewed by stakeholders.