Role of Informal Finance in Promoting SMEs in Nigeria

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dc.contributor.authorSheriff Akanji Ibrahim, PhD
dc.contributor.authorLukman Adebayo-Oke Abdulrauf, PhD
dc.contributor.authorYusuf Olamilekan Quadri, PhD
dc.contributor.authorAina Taiye John, PhD
dc.date.accessioned2025-07-21T13:20:55Z
dc.date.available2025-07-21T13:20:55Z
dc.date.issued2025-03-31
dc.description.abstractSMEs are critical to Nigeria's economic development, contributing to employment generation, innovation and poverty alleviation. However, access to finance remains a major constraint for SMEs, limiting their ability to grow and sustain operations. This study examines the role of informal financing in promoting SME growth in Ilorin Metropolis, Kwara State, Nigeria, focusing on the extent to which SMEs rely on informal financial sources, the impact of such financing on business performance. The study employs a quantitative research approach, using survey questionnaires to collect data from SME owners and managers. A multiple linear regression model was employed. Results established that informal financing positively impact SME growth, with personal savings having the strongest influence (β = 0.45, p < 0.05), followed by family and friends (β = 0.30, p < 0.05) and cooperative societies (β = 0.25, p < 0.05). Based on these findings, the study recommends policy interventions to improve SME access to financing, including reforming microfinance loan structures, strengthening cooperative societies, implementing financial literacy programs, and introducing government-backed credit facilities tailored to SME needs. Additionally, integrating informal financing models into the formal financial system could bridge the gap between SMEs and structured financial products, enhancing business sustainability.
dc.identifier.citationS. A. Ibrahim, L. A. O., Abdulraif, Y. O. Quadri and A. J. Aina (2025), Role of Informal Finance i Promoting SMEs in Nigeria. IUP Journal of Business Strategy, 22(1), 5-20.
dc.identifier.issn0972-9259
dc.identifier.urihttps://kwasuspace.kwasu.edu.ng/handle/123456789/5756
dc.language.isoen
dc.publisherIUP Journal of Business Strategy
dc.relation.ispartofseries22; 1
dc.titleRole of Informal Finance in Promoting SMEs in Nigeria
dc.typeArticle
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