Bank growth, competition, and small business financing in Nigeria Online publication date: Thu, 25-Aug-2022
by 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
Afro-Asian J. of Finance and Accounting (AAJFA), Vol. 12, No. 4, 2022
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.
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