Title: Bank growth, competition, and small business financing in Nigeria

Authors: Cosmas Ikechukwu Asogwa; Nonye Azih; Godwin Keres Okoro Okereke; Hyginus Osita Omeje; Christiana Ukamaka Nwachukwu; Joseph Ndozianyichukwu Chukwuma; Honesta Chidiebere Anorue; Favour Amarachi Moghalu; Godwin Emeka Eze; Anthonia Uju Uzuagu

Addresses: Department of Accountancy, University of Nigeria, Nsukka, Nigeria ' Department of Business Education, Ebonyi State University, Ebonyi State, Nigeria ' Department of Industrial Technical Education, University of Nigeria, Nsukka, Nigeria ' Department of Industrial Technical Education, University of Nigeria, Nsukka, Nigeria ' Department of Agricultural Education, University of Nigeria, Nsukka, Nigeria ' Department of Business Education, University of Nigeria, Nsukka, Nigeria ' Department of Agricultural Education, University of Nigeria, Nsukka, Nigeria ' Department of Business Education, University of Nigeria, Nsukka, Nigeria ' Department of Agricultural Education, University of Nigeria, Nsukka, Nigeria ' Department of Business Education, University of Nigeria, Nsukka, Nigeria

Abstract: This study used ex post-facto design to examine how competition among high-growth banks has affected the banks' provision of assets to small business borrowers in Nigeria following several regulations. The study used a bi-sample structure through a judgmental technique that examined 126 and 96 firm-years between 2001 and 2017, which enabled us to test both pre- and post-bank growth-competition Boone model effects. We found evidence that in both the pre- and post-bank-growth eras, competition significantly increased small business loans consistent with 'competition-stability' hypothesis. A unit increase in the Boone-competition indicator resulted in a 3.8% credit supply. However, when we used concentration ratio (CR6), we found that pre-mega structure competition yields negative effects but that the post-growth effect on credit supply remains positive. Controlled macroeconomic factors yield a very significant effect on credit supply. Thus, policymakers should not ignore the variables in competition-monetary transmission policies in Nigeria.

Keywords: bank competition; small business; competition; lending; growth; MegaBank; Boone competition indicator.

DOI: 10.1504/AAJFA.2022.125061

Afro-Asian Journal of Finance and Accounting, 2022 Vol.12 No.4, pp.526 - 550

Received: 04 Oct 2018
Accepted: 02 May 2019
Published online: 25 Aug 2022 *

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