Determinants of Microcredit Access to SMEs From Abia State University Microfinance Bank

Abstract

Access to microcredit is very vital in raising firm profitability and productivity, particularly for SMEs; it is a strategy for improved financial inclusion. Thus, the determinants of microcredit access to SMEs from Abia State University (ABSU) Microfinance Bank (MfB) were analyzed. Data generated via snowballing and simple random sampling was analyzed using descriptive statistics and Probit regression model. The socio-economic factors affected access to microcredit. The average amount of microcredit disbursed by the MfB was ₦109,500. Most (75%) invested in agricultural production and retail/petty trading (60%), respectively. The regression coefficient was 0.779. The identified constraints affected access to microcredit from the MfB. This study recommends adoption of measures to facilitate quick approvals and disbursement; improved financial information and trade union activities; provision of checklists and financial advisory services; mitigation of financial bottlenecks; repayment tenure restructuring; low interest rates; and improved financial inclusion.