Analysis of access to and demand for credit by small scale entrepreneurs : evidence from Oyo State, Nigeria

Abstract

This study examines choice of credit by small-scale enterprises from credit markets in Nigeria. A well structured questionnaire was designed to obtain relevant information from 350 respondents chosen through stratified sampling techniques and for the analysis, Multinomial logit was employed. The results showed that a large number of variables determine whether respondents apply for credit from credit markets or not. Each respondent was able to choose one of the five credit institutions as his/her preferred source of credit. It is conclusive that the availability of different sources of credit has impact on demand for credit. To this end, policies to enhance the role of informal credit institutions to bring about closer linkages between formal and informal institutions should be formulated. Better linkages would enable bank to benefit from the outreach and local knowledge of informal agents, expanding financial savings mobilization and credit delivery and improving the overall efficiency and productivity of the financial system.